UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from __________________ to __________________
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
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Securities registered pursuant to Section 12(b) of the Act:
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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.
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).
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.
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of April 30, 2022, the registrant had
Table of Contents
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Page |
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PART I. |
1 |
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Item 1. |
1 |
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1 |
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Condensed Consolidated Statements of Operations and Comprehensive Loss |
2 |
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3 |
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4 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
5 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
13 |
Item 3. |
21 |
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Item 4. |
21 |
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PART II. |
23 |
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Item 1. |
23 |
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Item 1A. |
23 |
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Item 2. |
72 |
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Item 3. |
72 |
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Item 4. |
72 |
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Item 5. |
72 |
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Item 6. |
73 |
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74 |
i
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains express or implied forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements involve risks, uncertainties, and other factors that may cause actual results, performance, or achievements to be materially different from the information expressed or implied by these forward-looking statements. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management and expected market growth are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.
Forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
ii
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly in the “Risk Factors” section, that could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, collaborations, joint ventures or investments that we may make or into which we may enter.
You should read this Quarterly Report on Form 10-Q and the documents that we reference herein and have filed or incorporated by reference as exhibits hereto completely and with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
iii
Summary of the Material and Other Risks Associated with Our Business
Our business is subject to numerous material and other risks and uncertainties that you should be aware of in evaluating our business. These risks include, but are not limited to, the following:
The material and other risks summarized above should be read together with the text of the full risk factors below and with the other information set forth in this Annual Report, including our consolidated financial statements and the related notes, as well as with other documents that we file with the SEC. If any such material and other risks and uncertainties actually occur, our business, prospects,
iv
financial condition and results of operations could be materially and adversely affected. The risks summarized above, or described in full below, are not the only risks that we face. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial may also materially adversely affect our business, prospects, financial condition and results of operations.
v
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
IKENA ONCOLOGY, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)
(Unaudited)
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March 31, |
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December 31, |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Marketable securities |
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— |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Right-of-use asset |
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Deposits and other assets |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses and other current liabilities |
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Operating lease liability |
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Deferred revenue |
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Total current liabilities |
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Long-term portion of lease liabilities |
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Deferred revenue, net of current portion |
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Total liabilities |
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Stockholders’ equity: |
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Preferred Stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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— |
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Accumulated deficit |
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( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
1
IKENA ONCOLOGY, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except share and per share amounts)
(Unaudited)
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Three Months Ended March 31, |
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2022 |
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2021 |
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Statement of Operations |
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Research and development revenue under collaboration |
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$ |
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$ |
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Operating expenses: |
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Research and development |
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General and administrative |
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Total operating expenses |
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Loss from operations |
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Other income (expense): |
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Interest income |
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Other expense |
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— |
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Total other income, net |
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Net loss |
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$ |
( |
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$ |
( |
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Other comprehensive loss: |
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Unrealized loss on marketable securities |
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( |
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$ |
— |
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Total comprehensive loss |
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$ |
( |
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$ |
— |
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Net loss per share: |
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Net loss per share attributable to common stockholders basic and |
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$ |
( |
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$ |
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Weighted-average common stocks outstanding, basic and diluted |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
2
IKENA ONCOLOGY, INC.
Condensed Consolidated Statement of Stockholders’ Equity
(in thousands, except share amounts)
(Unaudited)
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Common Stock |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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Shares |
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Amount |
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Capital |
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Income |
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Deficit |
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Equity |
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Balance as of December 31, 2021 |
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$ |
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$ |
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$ |
— |
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$ |
( |
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$ |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Exercise of stock options |
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— |
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— |
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— |
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Other comprehensive loss |
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— |
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— |
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— |
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( |
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— |
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( |
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Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Balance as of March 31, 2022 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
IKENA ONCOLOGY, INC.
Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity
(in thousands, except share amounts)
(Unaudited)
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Redeemable |
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Common Stock |
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Additional |
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Accumulated |
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Total |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Deficit |
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(Deficit) |
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Balance as of December 31, 2020 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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Initial public offering, net of |
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— |
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Conversion of convertible |
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( |
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( |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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Exercise of stock options |
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— |
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— |
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Net loss and comprehensive loss |
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— |
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— |
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— |
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— |
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— |
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( |
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( |
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Balance as of March 31, 2021 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
3
IKENA ONCOLOGY, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
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Three Months Ended March 31, |
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2022 |
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2021 |
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Cash flows from operating activities |
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Net loss |
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$ |
( |
) |
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$ |
( |
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Adjustments to reconcile net loss to net cash used in operating activities |
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Depreciation |
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Amortization of marketable securities |
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— |
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Stock-based compensation |
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Non-cash operating lease expense |
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Changes in operating assets and liabilities: |
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Prepaid expenses and other current assets |
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Accounts payable |
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Accrued expenses and other current liabilities |
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( |
) |
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( |
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Lease liability |
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( |
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( |
) |
Deferred revenue |
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( |
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( |
) |
Deposits and other assets |
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( |
) |
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— |
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Net cash flows used in operating activities |
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( |
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( |
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Cash flows from investing activities |
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Purchases of property and equipment |
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( |
) |
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( |
) |
Purchase of marketable securities |
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( |
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— |
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Net cash flows used in investing activities |
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( |
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( |
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Cash flows from financing activities |
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Proceeds from initial public offering, net of offering costs |
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— |
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Payment of preferred issuance costs |
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— |
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( |
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Proceeds from exercise of stock options |
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Net cash flows provided by financing activities |
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Net increase (decrease) in cash and cash equivalents and restricted cash |
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( |
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Cash, cash equivalents and restricted cash, beginning of period |
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Cash, cash equivalents and restricted cash, end of period |
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$ |
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$ |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash included in other assets |
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Cash, cash equivalents and restricted cash, end of period |
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$ |
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$ |
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Supplemental disclosure of non-cash activities |
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Purchases of property and equipment in accrued expense |
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$ |
— |
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$ |
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Right-of-use assets and lease liabilities recognized upon lease inception |
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$ |
— |
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$ |
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Deferred transaction costs in accounts payable and accrued expenses |
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$ |
— |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
IKENA ONCOLOGY, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1. Organization and Basis of Presentation
Ikena Oncology, Inc. (the "Company") is a targeted oncology company developing precision medicines tailored to biomarker-defined patient groups with specific unmet needs. With its robust biomarker and translational approach the Company aims to develop targeted treatments and define patient populations who are most likely to respond to treatment. The Company's current programs are across the Hippo pathway, RAS pathway, and key immune signals in the tumor-microenvironment (TME), with approaches to targeting both cancer driving targets and mechanisms of resistance to targeted therapies. The Company's focus on patient-driven development is platform and process agnostic, allowing it to research both known and novel targets, with a shared guiding principle of aiming to address the unmet needs of biomarker-defined patient populations. Since the Company commenced operations in 2016, it has advanced multiple product candidates into clinical development. In addition, the Company has a robust pipeline of discovery-stage targeted oncology programs.
Basis of Presentation: The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the ASC and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).
The accompanying condensed consolidated financial statements and footnotes to the financial statements have been prepared on the same basis as the most recently audited annual financial statements and, in the opinion of management, reflect all normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of March 31, 2022 and the results of its operations and its cash flows for the three months ended March 31, 2022. The results for the three months ended March 31, 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2022, any other interim periods, or any future year or period. These condensed consolidated financial statements should be read in conjunction with, our audited consolidated financial statements for the year ended December 31, 2021, which were included in our Annual Report on Form 10-K that was filed with the Securities and Exchange Commission ("SEC") on March 17, 2022.
Note 2. Summary of Significant Accounting Policies
Principles of Consolidation: The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Arrys Therapeutics, Inc. (“Arrys”), Ikena Oncology Securities Corporation and Amplify Medicines, Inc, (“Amplify”). All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates: The preparation of the Company’s financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Estimates and judgments are based on historical information and other market-specific or various relevant assumptions, including in certain circumstances, future projections, that management believes to be reasonable under the circumstances. Actual results could differ materially from estimates. Significant estimates and assumptions are used for, but not limited to the accruals for research and development expenses, research and development revenue under a collaboration agreement, the determination of fair value of equity instruments and intangible assets acquired in an asset acquisition and, for periods prior to the completion of the IPO, stock based compensation expense.
Summary of Significant Accounting Policies: The significant accounting policies and estimates used in the preparation of the accompanying consolidated financial statements are described in the Company’s audited consolidated financial statements for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K that was filed with the SEC on March 17, 2022. There have been no material changes in the Company’s significant accounting policies during the three months ended March 31, 2022 except as discussed below.
Concentration of Credit Risk and of Significant Suppliers: Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, and marketable securities. Cash and cash equivalents are deposited with federally insured financial institutions in the United States and may, at times, exceed federally insured limits. The Company places marketable securities with highly rated financial institutions, and, by policy, limit the amount of credit exposure to any one financial institution. The Company has not experienced any losses on such accounts and does not believe it is exposed to any significant credit risk on cash and cash equivalents.
5
The Company is dependent on third-party manufacturers and clinical research organizations to supply products and provide services for research and development activities in its programs. In particular, the Company relies and expects to continue to rely on a small number of manufacturers to supply it with its requirements for the active pharmaceutical ingredients and formulated drugs related to these programs. These programs could be adversely affected by a significant interruption in the supply of active pharmaceutical ingredients and formulated drugs.
Recent Accounting Pronouncements: From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by us as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on our consolidated financial statements and disclosures.
Note 3. Fair Value Measurements
The following table presents information about the Company’s financial assets measured or disclosed at fair value by level within the fair value hierarchy (in thousands):
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As of March 31, |
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Quoted Prices in Active Markets |
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Significant Observable Inputs |
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Significant Unobservable Inputs |
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Assets |
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Cash equivalents: |
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Money market funds |
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$ |
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$ |
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$ |
— |
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$ |
— |
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Commercial paper |
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— |
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— |
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Marketable securities |
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Commercial paper |
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— |
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— |
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U.S. treasury securities |
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— |
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— |
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Corporate debt securities |
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— |
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— |
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Total assets |
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$ |
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$ |
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$ |
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$ |
— |
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As of December 31, |
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Quoted Prices in Active Markets |
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Significant Observable Inputs |
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Significant Unobservable Inputs |
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Cash equivalents: |
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Money market funds |
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$ |
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$ |
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$ |
— |
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$ |
— |
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Total |
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$ |
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$ |
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$ |
— |
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$ |
— |
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During the three months ended March 31, 2022 and year ended December 31, 2021, there were
6
Note 4. Marketable securities
The following table summarizes the Company's marketable securities (in thousands):
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As of March 31, 2022 |
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|||||||||||||
|
|
Amortized Cost |
|
|
Gross Unrealized Gains |
|
|
Gross Unrealized Losses |
|
|
Fair Value |
|
||||
Commercial paper |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
U.S. treasury securities |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Corporate debt securities |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Total marketable securities |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
The Company did not hold any marketable securities as of December 31, 2021.
The fair values of the Company's marketable securities by classification in the condensed consolidated balance sheets were as follows:
|
|
As of March 31, 2022 |
|
|
Cash and cash equivalents |
|
$ |
|
|
Marketable securities |
|
|
|
|
Total |
|
$ |
|
Marketable securities fair value by contractual maturity were as follows (in thousands):
|
|
As of March 31, 2022 |
|
|
Due in one year or less |
|
$ |
|
|
Due after one year through five years |
|
|
|
|
Total |
|
$ |
|
The following table summarizes the amount of gross unrealized losses and the estimated fair value of marketable securities in an unrealized loss position by length of time the securities have been in an unrealized loss position as of March 31, 2022 (in thousands):
|
|
Less than 12 Months |
|
|
12 Months or More |
|
|
Total |
|
|||||||||||||||
|
|
Gross Unrealized Losses |
|
|
Estimated Fair Value |
|
|
Gross Unrealized Losses |
|
|
Estimated Fair Value |
|
|
Gross Unrealized Losses |
|
|
Estimated Fair Value |
|
||||||
Commercial paper |
|
$ |
( |
) |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
|
||
U.S. treasury securities |
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Corporate debt securities |
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Total |
|
$ |
( |
) |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
|
As of March 31, 2022, the Company held
7
Note 5. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following (in thousands):
|
|
As of March 31, 2022 |
|
|
As of December 31, 2021 |
|
||
Clinical, manufacturing and scientific development |
|
$ |
|
|
$ |
|
||
Prepaid Insurance |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total |
|
$ |