UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______ to _______
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class of Securities Registered |
Trading Symbol |
Name of Each Exchange on which Securities are Registered |
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.
Large accelerated filer |
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Accelerated filer |
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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 November 8, 2024, the number of outstanding shares of the Registrant’s common stock was
Table of Contents
PART I-FINANCIAL INFORMATION
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Item 1. Financial Statements. |
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Page |
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3 |
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3 |
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3 |
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Condensed Consolidated Statements of Operations and Comprehensive Loss |
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4 |
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5 |
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7 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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25 |
Item 3. Quantitative and Qualitative Disclosures About Market Risk |
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37 |
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37 |
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38 |
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38 |
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
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104 |
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104 |
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104 |
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104 |
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105 |
2
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
Olema Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands, except for share amounts)
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September 30, |
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December 31, |
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2024 |
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2023 |
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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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Prepaid expenses and other current assets |
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Total current assets |
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Operating lease right-of-use assets |
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Other assets and long-term deposits |
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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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Operating lease liabilities, current |
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Other current liabilities |
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Total current liabilities |
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Operating lease liabilities, 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 income |
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Accumulated deficit |
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( |
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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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See accompanying notes to the condensed consolidated financial statements.
3
Olema Pharmaceuticals, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
(Amounts in thousands, except for share and per share amounts)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Operating expenses: |
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Research and development |
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$ |
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$ |
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$ |
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$ |
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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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( |
) |
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( |
) |
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( |
) |
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( |
) |
Other income: |
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Interest income |
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Other income (expense) |
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( |
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( |
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Total other income |
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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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$ |
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( |
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Net loss per share, basic and diluted |
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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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( |
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Weighted average shares used to compute net loss per share, basic and diluted |
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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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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$ |
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( |
) |
Other comprehensive income: |
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Net unrealized gain on marketable securities |
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Total 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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( |
) |
See accompanying notes to the condensed consolidated financial statements.
4
Olema Pharmaceuticals, Inc.
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)
(Amounts in thousands, except for share amounts)
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Three Months Ended September 30, 2024 |
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Accumulated |
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Additional |
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Other |
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Total |
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Common Stock |
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Paid-in |
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Comprehensive |
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Accumulated |
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Stockholders' |
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Shares |
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Amount |
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Capital |
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(Loss) Income |
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Deficit |
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Equity |
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Balances at June 30, 2024 |
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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 expense |
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— |
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— |
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— |
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— |
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Employee stock purchase plan expense |
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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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Net unrealized gain on marketable securities |
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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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( |
Balances at September 30, 2024 |
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$ |
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$ |
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$ |
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( |
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$ |
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Nine Months Ended September 30, 2024 |
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Accumulated |
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Additional |
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Other |
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Total |
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Common Stock |
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Paid-in |
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Comprehensive |
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Accumulated |
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Stockholders' |
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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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Balances at December 31, 2023 |
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$ |
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$ |
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$ |
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( |
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$ |
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Issuance of shares under at-the-market offering, net of issuance costs of $ |
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— |
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— |
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— |
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Stock-based compensation expense |
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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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Issuance of shares under the employee stock purchase plan |
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— |
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— |
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— |
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Employee stock purchase plan expense |
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— |
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— |
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— |
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— |
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Vesting of restricted stock awards |
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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 unrealized gain on marketable securities |
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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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( |
Balances at September 30, 2024 |
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$ |
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$ |
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$ |
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( |
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$ |
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5
Olema Pharmaceuticals, Inc.
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)
(Amounts in thousands, except for share amounts)
|
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Three Months Ended September 30, 2023 |
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Accumulated |
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Additional |
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Other |
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Total |
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Common Stock |
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Paid-in |
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Comprehensive |
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Accumulated |
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Stockholders' |
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Shares |
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Amount |
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Capital |
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(Loss) Income |
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Deficit |
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Equity |
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Balances at June 30, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
||||
Issuance of shares under equity private placement, net of issuance costs of $ |
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— |
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— |
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Stock-based compensation expense |
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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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Employee stock purchase plan expense |
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— |
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— |
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— |
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— |
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Vesting of early exercised stock options |
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— |
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— |
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— |
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Vesting of restricted stock awards |
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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 unrealized gain on marketable securities |
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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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( |
Balances at September 30, 2023 |
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$ |
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$ |
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$ |
( |
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( |
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$ |
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Nine Months Ended September 30, 2023 |
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Accumulated |
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Additional |
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Other |
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Total |
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Common Stock |
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Paid-in |
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Comprehensive |
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Accumulated |
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Stockholders' |
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Shares |
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Amount |
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Capital |
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(Loss) Income |
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Deficit |
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Equity |
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Balances at December 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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Issuance of shares under equity private placement, net of issuance costs of $ |
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— |
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— |
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Stock-based compensation expense |
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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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Issuance of shares under employee stock purchase plan |
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— |
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— |
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— |
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Employee stock purchase plan expense |
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— |
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— |
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— |
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— |
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Vesting of early exercised stock options |
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— |
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Vesting of restricted stock awards |
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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 unrealized gain on marketable securities |
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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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( |
Balances at September 30, 2023 |
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$ |
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$ |
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$ |
( |
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( |
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$ |
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See accompanying notes to the condensed consolidated financial statements.
6
Olema Pharmaceuticals, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
(Amounts in thousands)
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Nine Months Ended September 30, |
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2024 |
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2023 |
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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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$ |
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( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization expense |
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Non-cash lease expense |
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Non-cash interest income on marketable securities |
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( |
) |
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( |
) |
Loss on sale of equipment |
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— |
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Stock-based compensation expense, including employee stock purchase plan 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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Other assets and long-term deposits |
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( |
) |
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( |
) |
Accounts payable |
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( |
) |
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Other current liabilities |
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( |
) |
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Operating lease liabilities |
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( |
) |
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( |
) |
Net cash used in operating activities |
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( |
) |
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( |
) |
Cash flows from investing activities: |
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Purchase of equipment |
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( |
) |
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— |
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Disposal of fixed assets |
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— |
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Maturities of marketable securities |
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Purchases of marketable securities |
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( |
) |
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( |
) |
Net cash provided by investing activities |
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Cash flows from financing activities: |
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Issuance of shares under at-the-market offering, net of issuance costs of $ |
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— |
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Proceeds from equity private placement, net of issuance costs of $ |
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— |
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Proceeds from exercise of stock options |
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Proceeds from issuance of common stock under employee stock purchase plan |
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Net cash provided by financing activities |
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Net (decrease) increase in cash and cash equivalents |
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( |
) |
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Cash and cash equivalents at beginning of period |
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||
Cash and cash equivalents at end of period |
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$ |
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|
$ |
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|
||
See accompanying notes to the condensed consolidated financial statements.
7
Olema Pharmaceuticals, Inc.
Notes to condensed consolidated financial statements
(Unaudited)
Olema Pharmaceuticals, Inc. (“Olema” or the “Company”) is a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of next-generation targeted therapies for women’s cancers. The Company is advancing a pipeline of novel therapies by leveraging its deep understanding of endocrine-driven cancers, nuclear receptors, and mechanisms of acquired resistance. The Company's wholly-owned, lead product candidate, palazestrant (OP-1250), is a novel, orally-available small molecule with dual activity as both a complete estrogen receptor ("ER") antagonist ("CERAN") and selective ER degrader ("SERD"). In addition to its lead product candidate, Olema is developing a potent KAT6 inhibitor (OP-3136).
The Company is located in San Francisco, California, and was incorporated in Delaware on August 7, 2006, under the legal name of CombiThera, Inc., and on March 25, 2009, was renamed Olema Pharmaceuticals, Inc. The Company’s principal operations are based in San Francisco, California, and it has operations in Cambridge, Massachusetts. Olema Oncology Australia Pty Ltd was incorporated on January 6, 2021, and is a wholly-owned subsidiary of the Company (collectively with Olema Pharmaceuticals, Inc., referred to as “Olema” or the “Company” herein). It operates in
Liquidity
The Company had $
At-The-Market Offering
On January 5, 2024, the Company entered into a sales agreement (the “Sales Agreement”) with Cowen and Company, LLC (“TD Cowen”) as sales agent, pursuant to which the Company may offer and sell, from time to time, shares of our common stock, having an aggregate offering price of up to $
8
As of September 30, 2024, approximately $
Impact of Geopolitical and Macroeconomic Events
Global economic and business activities continue to face widespread geopolitical and macroeconomic uncertainties, including labor shortages, inflation rates and the responses by central banking authorities to control such inflation, monetary supply shifts and related financial market risks and instability, recession risks, as well as potential disruptions from the Russia-Ukraine conflict and armed conflict between Israel and groups based in surrounding regions, all of which have resulted in volatility in the U.S. and global financial markets and which have led to, and may continue to lead to, additional disruptions to trade, commerce, pricing stability, credit availability and supply chain continuity globally. The extent of the impact of these factors on the Company’s operational and financial performance, including its ability to execute its business strategies and initiatives in the expected time frame, will depend on future developments, which are uncertain and cannot be predicted. Any continued or renewed disruption resulting from these factors could negatively impact the Company’s business. The Company continues to monitor the impact of these geopolitical and macroeconomic factors on its results of operations, financial condition and cash flows.
Basis of Presentation and Consolidation
The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting, and the instructions to Form 10‑Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These condensed consolidated financial statements include the accounts of Olema Pharmaceuticals, Inc. and its wholly-owned subsidiary, Olema Oncology Australia Pty Ltd. All intercompany balances and transactions have been eliminated upon consolidation.
Unaudited Interim Financial Information
The interim condensed consolidated balance sheet as of September 30, 2024, and the statements of operations and comprehensive loss, and stockholders’ equity for the three and nine months ended September 30, 2024 and 2023, and the statements of cash flows for the nine months ended September 30, 2024 and 2023 are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair presentation of the Company’s condensed consolidated financial statements included in this report. The financial data and the other information disclosed in these notes to the condensed consolidated financial statements related to the three- and six-month periods are also unaudited. The results of operations presented in these unaudited condensed consolidated financial statements are not necessarily indicative of the results to be expected for the year ending December 31, 2024, or for any other future annual or interim period. The condensed consolidated balance sheet as of December 31, 2023 included herein was derived from the audited financial statements as of that date. These interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Form 10‑K as filed with the SEC on March 11, 2024 (the “Annual Report”).
Use of Estimates
The accompanying condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of expenses during the reporting period. Significant areas that require management’s estimates include accruals of research and development expenses, including accrual of research contract costs, stock-based compensation assumptions, including the fair value of common stock. On an ongoing basis, the Company evaluates its estimates and judgments, which
9
are based on historical and anticipated results and trends and on various other assumptions that management believes to be reasonable under the circumstances. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents are defined as short-term, highly liquid investments with original maturities of 90 days or fewer at the date of purchase. Cash deposits are all in reputable financial institutions in the United States as of September 30, 2024, and December 31, 2023. Cash and cash equivalents consisted of cash on deposit with U.S. banks, including the Company’s bank account for its Australia subsidiary, denominated in U.S. dollars and Australian dollars and investments in interest bearing money market funds.
Marketable Securities
All marketable securities have been classified as “available-for-sale” and are carried at estimated fair value as determined based upon quoted market prices or pricing models for similar securities. Management determines the appropriate classification of its investments at the time of purchase and reevaluates such designation as of each balance sheet date. Unrealized gains and losses are excluded from net loss and are reported as a component of comprehensive loss. Realized gains and losses and declines in fair value judged to be other than temporary, if any, on available-for-sale securities are included in interest income. The cost of securities sold is based on the specific-identification method. Interest earned on marketable securities is included in interest income.
The Company periodically assesses its available-for-sale marketable securities for other-than-temporary impairment. For debt securities in an unrealized loss position, the Company first considers its intent to sell, or whether it is more likely than not that the Company will be required to sell the debt securities before recovery of their amortized cost basis. If either of these criteria are met, the amortized cost basis of such debt securities is written down to fair value through other expense.
For debt securities in an unrealized loss position that do not meet the aforementioned criteria, the Company assesses whether the decline in the fair value of such debt securities has resulted from credit losses or other factors. The Company considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and any adverse conditions specifically related to the securities, among other factors. If this assessment indicates that a credit loss may exist, the Company then compares the present value of cash flows expected to be collected from such securities to their amortized cost basis. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded through other expense, limited by the amount that the fair value is less than the amortized cost basis. Any additional impairment not recorded through an allowance for credit losses is recognized in other comprehensive loss. The Company has not recorded any impairments for its marketable securities.
Concentration of Credit Risk and Other Risks and Uncertainties
Financial instruments that potentially subject the Company to concentration of credit risk consist of cash, cash equivalents, and marketable securities. The Company invests in a variety of financial instruments and, by its policy, limits these financial instruments to high credit quality securities issued by the U.S. government, U.S. government-sponsored agencies and highly rated banks and corporations, subject to certain concentration limits. The Company’s cash, cash equivalents, and marketable securities are held by financial institutions in the United States that management believes are of high credit quality. Amounts on deposit with individual banking institutions may at times exceed the limits insured by the Federal Deposit Insurance Corporation (“FDIC”); however, the Company has not experienced any losses on such deposits.
The Company’s future results of operations involve a number of other risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, uncertainty of results of clinical trials and reaching milestones, uncertainty of regulatory approval of the Company’s current and potential future product candidates, uncertainty of market acceptance of the Company’s product candidates, competition from substitute products and larger companies,
10
securing and protecting proprietary technology, strategic relationships, dependence on key individuals or sole-source suppliers, and geopolitical and macroeconomic factors.
The Company’s product candidates require approvals from the U.S. Food and Drug Administration (“FDA”) and comparable foreign regulatory agencies prior to commercial sales in their respective jurisdictions. There can be no assurance that any product candidates will receive the necessary approvals. If the Company were denied approval, approval was delayed or the Company was unable to maintain approval for any product candidate, it could have a materially adverse impact on the Company.
Leases
The Company adopted Accounting Standard Update (“ASU”) 2016-12, Leases, Topic 842, (“Topic 842”) as of January 1, 2021. Under Topic 842, lessees are required to recognize for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use (“ROU”) asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the condensed consolidated statements of operations and comprehensive loss.
At the inception of an arrangement, the Company determines if an arrangement is, or contains, a lease based on the facts and circumstances present in that arrangement. Lease classification, recognition, and measurement are then determined at the lease commencement date. For arrangements that contain a lease, the Company (i) identifies lease and non-lease components, (ii) determines the consideration in the contract, (iii) determines whether the lease is an operating or finance lease; and (iv) recognizes lease ROU assets and liabilities. Lease liabilities and their corresponding ROU assets are recorded based on the present value of future lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable and as such, the Company uses the incremental borrowing rate based on the information available at the lease commencement date, which represents an internally developed rate that would be incurred to borrow, on a collateralized basis, over a similar term, an amount equal to the lease payments in a similar economic environment.
Most leases include options to renew and, or terminate the lease, which can impact the lease term. The exercise of these options is at the Company’s discretion. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. For any lease modification, the Company reassesses the lease classification, remeasures the related lease liability using an updated discount rate that reflects the modified lease term, and adjusts the related ROU asset under the lease modification guidance under Topic 842.
The Company has operating leases for its research and development and office facilities. Fixed lease payments on operating leases are recognized over the expected term of the lease on a straight-line basis. Variable lease expenses that are not considered fixed are recognized as incurred. Fixed and variable lease expense on operating leases is recognized within operating expenses within our condensed consolidated statements of operations and comprehensive loss.
The Company elected to not apply the recognition requirements of Topic 842 to short-term leases with terms of 12 months or less. Additional information and disclosures required by Topic 842 are contained in Note 11 “Lease” in the Annual Report.
Research and Development Costs
Research and development costs are expensed as incurred. Research and development expenses consist of costs incurred to discover, research and develop product candidates. These costs are recorded within research and development expenses in the condensed consolidated statements of operations and include personnel expenses, stock-based compensation expenses, allocated general and administrative expenses, and external costs including fees paid to consultants and contract research organizations (“CROs”) and contract manufacturing organizations (“CMOs”), in connection with non-clinical studies and clinical trials, and other related clinical trial fees, such as for investigator fees, patient screening, laboratory work, clinical trial database management, clinical trial material management and statistical compilation and analysis. Non-refundable prepayments for goods or services that will be used or rendered for future research and development activities
11
are recorded as prepaid expenses and other current assets. Such amounts are recognized as an expense as the goods are delivered or the related services are performed.
Costs incurred in obtaining technology licenses that do not meet the definition of a business are charged immediately to research and development expense if the technology licensed has not reached technological feasibility and has no alternative future uses.
Reimbursements of certain costs associated with research activities performed under the agreement with Novartis Institutes for BioMedical Research, Inc. (“Novartis”) are recorded as a reduction of research and development expenses and as a receivable due from Novartis, which is recorded under prepaid expenses and other current assets in the accompanying condensed consolidated financial statements, as described in Note 10, Commitments and Contingencies – Clinical Collaboration and Supply Agreement.
Research Contract Costs and Accruals
The Company has from time to time entered into various research and development and other agreements with commercial firms, researchers, universities and others for provisions of goods and services. These agreements are generally cancelable, and the related costs are recorded as research and development expenses as incurred.
The Company records accruals for estimated ongoing research and development costs. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the projects, studies or clinical trials, including the phase or completion of events, invoices received and contracted costs. Judgments and estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ materially from the Company’s estimates. The Company’s historical accrual estimates have not been materially different from the actual costs.
Stock-Based Compensation
Stock-based compensation cost, including grants of stock options and restricted stock awards issued under the Company’s equity incentive plans and ESPP, is measured at the grant date based on the estimated fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period. Stock-based compensation cost for performance-based restricted stock unit awards issued under the Company’s equity incentive plan is measured at the grant date based on the estimated fair value of the award, which is based on the closing stock price on the grant date, and is recognized as an expense when the Company determines that it is probable that the performance goals will be achieved, which the Company assess on a quarterly basis. The Company recognizes stock compensation in accordance with ASC 718, Compensation — Stock Compensation (“ASC 718”). The Company’s determination of the fair value of stock options with time-based vesting on the date of grant utilizes the Black-Scholes option-pricing model. The Company estimates volatility using stock prices of peer companies and its historical data, risk-free rates using the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equal to the expected term, and dividend yield using the Company’s expectations and historical data. The Company uses the simplified method to calculate the expected term of employee stock option grants. Under the simplified method, the expected term is estimated to be the mid-point between the vesting date and the contractual term of the option. For awards with graded vesting, in which specified tranches of the options vest on different dates, the Company uses a single weighted average expected life to value the entire award, which is equal to the average of the weighted average vesting period of the award and the contractual term of the award. Equity instruments issued to nonemployees are recorded at their fair value on the grant date and without subsequent remeasurement. The amount of stock-based compensation expense recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest, including awards with graded vesting. As part of the requirements of ASC 718, the Company has elected to account for forfeitures of stock option grants as they occur.
Foreign Currency Transactions
The functional currency of Olema Oncology Australia Pty Ltd, the Company’s wholly-owned subsidiary, is the U.S. dollar. Accordingly, all monetary assets and liabilities of the subsidiary are remeasured into U.S. dollars at
12
the current period-end exchange rates and non-monetary assets are remeasured using historical exchange rates. Income and expense elements are remeasured to U.S. dollars using the average exchange rates in effect during the period. Remeasurement gains and losses are recorded as other income (expense) on the consolidated statements of operations.
The Company is subject to foreign currency risk with respect to its clinical and manufacturing contracts denominated in currencies other than the U.S. dollar, predominantly the Australian dollar and the Euro. Payments on contracts denominated in foreign currencies are made at the spot rate on the day of payment. Changes in the exchange rate between billing dates and payment dates are recorded within other income (expense) on the condensed consolidated statements of operations.
Net Loss Per Common Share
Basic net loss per common share is computed by dividing the net loss per common share by the weighted average number of common shares outstanding for the period without consideration of common stock equivalents. Diluted net loss per common share is computed by adjusting net loss to reallocate undistributed earnings based on the potential impact of dilutive securities, and by dividing the diluted net loss by the weighted average number of common shares outstanding for the period, including potential dilutive common shares. For purpose of this calculation, outstanding stock options, including unvested early exercised options, unvested restricted stock awards, unvested performance-based restricted stock unit awards and contingently issuable common stock related to the 2020 Employee Stock Purchase Plan (the “ESPP”) are considered potential dilutive common shares. Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share for all periods as the inclusion of all potential common shares outstanding would have been anti-dilutive.
Recent Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2023-07, Segment Reporting (Topic 280) (“ASU 2023-07”). ASU 2023-07 expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements under ASU 2023-07 are also required for public entities with a single reportable segment. The guidance is effective for the fiscal year beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact of this update but does not expect it to have a material impact on its consolidated financial statements and disclosures.
3. Fair Value Measurement
The Company assesses the fair value of financial instruments based on the provisions of ASC 820, Fair Value Measurements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:
13
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|
|
September 30, 2024 |
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||||||||||||||||
(in thousands) |
|
Level 1 |
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|
Level 2 |
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|
Level 3 |
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|
Total |
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||||||||
Financial Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash |
|
$ |
|
|
|
$ |
|
— |
|
|
$ |
|
— |
|
|
$ |
|
|
||
Money market funds |
|
|
|
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
||
Commercial paper |
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
||
Corporate bonds |
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
||
U.S. government treasury bills |
|
|
|
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
||
Government-sponsored enterprise securities |
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
||
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
— |
|
|
$ |
|
|
|||
|
|
|
December 31, 2023 |
|
||||||||||||||||
(in thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||||||
Financial Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash |
|
$ |
|
|
|
$ |
|
— |
|
|
$ |
|
— |
|
|
$ |
|
|
||
Money market funds |
|
|
|
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
||
Commercial paper |
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
||
Corporate bonds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government treasury bills |
|
|
|
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
||
Government-sponsored enterprise securities |
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
||
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
— |
|
|
$ |
|
|
|||
|
|
September 30, 2024 |
|
|||||||||||||||||
|
|
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Gross |
|
|
Gross |
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||||||
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Amortized |
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Unrealized |
|
|
Unrealized |
|
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Estimated |
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||||||||
(in thousands) |
|
Cost |
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|
Gains |
|
|
Losses |
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|
Fair Value |
|
||||||||
Financial Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
|
|
|
$ |
|
— |
|
|
$ |
|
— |
|
|
$ |
|
|
||
Short-term marketable securities (<12 months to maturity) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|||
Long-term marketable securities (>12 months to maturity) |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|||
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
( |
) |
|
$ |
|
|
|||
|
|
December 31, 2023 |
|
|||||||||||||||||
|
|
|
|
|
|
Gross |
|
|
Gross |
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|
||||||
|
|
Amortized |
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Unrealized |
|
|
Unrealized |
|
|
Estimated |
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||||||||
(in thousands) |
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Fair Value |
|
||||||||
Financial Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
|
|
|
$ |
|
— |
|
|
$ |
|
— |
|
|
$ |
|
|
||
Short-term marketable securities (<12 months to maturity) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|||
Long-term marketable securities (>12 months to maturity) |
|
|
|
|
|
|
|
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