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

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

 

For the quarterly period ended March 31, 2024

OR

 

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

 

For the transition period from _______ to _______

Commission File Number: 001-39712

OLEMA PHARMACEUTICALS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware

30-0409740

(State or other jurisdiction of

incorporation or organization)

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

780 Brannan Street

San Francisco, CA

94103

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code: (415) 651‑3316

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

Common Stock, par value $0.0001 per share

OLMA

The Nasdaq Global Select Market

 

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

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

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

 

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller reporting company

 

Emerging growth company

 

 

 

 

 

 

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

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

As of May 3, 2024, the number of outstanding shares of the Registrant’s common stock was 55,933,827.

 

 

 


Table of Contents

PART I-FINANCIAL INFORMATION

 

 

 

Item 1. Financial Statements.

 

 

 

 

Page

PART I. FINANCIAL INFORMATION

 

3

Item 1. Financial Statements (unaudited)

 

3

Condensed Consolidated Balance Sheets

 

3

Condensed Consolidated Statements of Operations and Comprehensive Loss

 

4

Condensed Consolidated Statements of Stockholders’ Equity

 

2

Condensed Consolidated Statements of Cash Flows

 

2

Notes to Unaudited Condensed Consolidated Financial Statements

 

3

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

 

20

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

30

Item 4. Controls and Procedures

 

30

PART II. OTHER INFORMATION

 

32

Item 1. Legal Proceedings

 

32

Item 1A. Risk Factors

 

32

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

 

97

Item 3. Defaults Upon Senior Securities

 

97

Item 4. Mine Safety Disclosures

 

97

Item 5. Other Information

 

97

Item 6. Exhibits

 

98

 

 

 

 

2


PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

Olema Pharmaceuticals, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(Amounts in thousands, except for share amounts)

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

33,720

 

 

$

68,539

 

Marketable securities

 

 

215,257

 

 

 

193,268

 

Prepaid expenses and other current assets

 

 

3,113

 

 

 

4,706

 

Total current assets

 

 

252,090

 

 

 

266,513

 

Operating lease right-of-use assets

 

 

2,055

 

 

 

2,291

 

Other assets and long-term deposits

 

 

9,549

 

 

 

8,141

 

Total assets

 

$

263,694

 

 

$

276,945

 

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

7,656

 

 

$

2,698

 

Operating lease liabilities, current

 

 

1,057

 

 

 

988

 

Other current liabilities

 

 

17,511

 

 

 

17,935

 

Total current liabilities

 

 

26,224

 

 

 

21,621

 

Operating lease liabilities, net of current portion

 

 

1,152

 

 

 

1,429

 

Total liabilities

 

 

27,376

 

 

 

23,050

 

Commitments and contingencies (Note 10)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 10,000,000 shares authorized as of March 31, 2024 and December 31, 2023; no shares issued and outstanding as of March 31, 2024 and December 31, 2023.

 

 

 

 

 

 

Common stock, $0.0001 par value; 490,000,000 shares authorized as of March 31, 2024 and December 31, 2023; 55,932,127 and 55,097,118 shares issued as of March 31, 2024 and December 31, 2023, respectively; 55,867,863 and 54,992,784 shares outstanding as of March 31, 2024 and December 31, 2023, respectively.

 

 

4

 

 

 

4

 

Additional paid-in capital

 

 

572,926

 

 

 

559,176

 

Accumulated other comprehensive (loss) income

 

 

(10

)

 

 

347

 

Accumulated deficit

 

 

(336,602

)

 

 

(305,632

)

Total stockholders’ equity

 

 

236,318

 

 

 

253,895

 

Total liabilities and stockholders’ equity

 

$

263,694

 

 

$

276,945

 

 

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)

 

 

 

Three Months Ended March 31,

 

 

 

 

2024

 

 

 

2023

 

Operating expenses:

 

 

 

 

 

 

 

 

 Research and development

 

$

 

29,883

 

 

$

 

22,826

 

 General and administrative

 

 

 

4,456

 

 

 

 

6,776

 

Total operating expenses

 

 

 

34,339

 

 

 

 

29,602

 

Loss from operations

 

 

 

(34,339

)

 

 

 

(29,602

)

Other income:

 

 

 

 

 

 

 

Interest income

 

 

 

3,352

 

 

 

 

1,305

 

Other income

 

 

 

17

 

 

 

 

11

 

Total other income

 

 

 

3,369

 

 

 

 

1,316

 

Net loss

 

$

 

(30,970

)

 

$

 

(28,286

)

Net loss per share, basic and diluted

 

$

 

(0.56

)

 

$

 

(0.70

)

Weighted average shares used to compute net loss per share, basic and diluted

 

 

 

55,574,324

 

 

 

 

40,354,493

 

 

 

 

Three Months Ended March 31,

 

 

 

 

2024

 

 

 

2023

 

Net loss

 

$

 

(30,970

)

 

$

 

(28,286

)

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

Net unrealized (loss) gain on marketable securities

 

 

 

(357

)

 

 

 

835

 

Total comprehensive loss

 

$

 

(31,327

)

 

$

 

(27,451

)

 

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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

(Loss) Income

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2023

 

 

54,992,784

 

 

$

 

4

 

 

$

 

559,176

 

 

$

 

347

 

 

 

 

(305,632

)

 

$

 

253,895

 

Issuance of shares under at-the-market offering, net of issuance costs of $167

 

 

546,326

 

 

 

 

 

 

 

 

7,901

 

 

 

 

 

 

 

 

 

 

 

 

7,901

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

4,704

 

 

 

 

 

 

 

 

 

 

 

 

4,704

 

Exercise of stock options

 

 

288,402

 

 

 

 

 

 

 

 

940

 

 

 

 

 

 

 

 

 

 

 

 

940

 

Employee stock purchase plan expense

 

 

 

 

 

 

 

 

 

 

205

 

 

 

 

 

 

 

 

 

 

 

 

205

 

Vesting of restricted stock awards

 

 

40,351

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(357

)

 

 

 

 

 

 

 

(357

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(30,970

)

 

 

 

(30,970

)

Balances at March 31, 2024

 

 

55,867,863

 

 

$

 

4

 

 

$

 

572,926

 

 

$

 

(10

)

 

 

 

(336,602

)

 

$

 

236,318

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

Shares

 

 

Amount

 

 

Capital

 

 

(Loss) Income

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2022

 

 

40,287,097

 

 

$

 

3

 

 

$

 

408,333

 

 

$

 

(1,813

)

 

$

 

(208,977

)

 

$

 

197,546

 

Vesting of early exercised stock options

 

 

6,990

 

 

 

 

 

 

 

 

30

 

 

 

 

 

 

 

 

 

 

 

 

30

 

Vesting of restricted stock awards

 

 

49,318

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

94,915

 

 

 

 

 

 

 

 

220

 

 

 

 

 

 

 

 

 

 

 

 

220

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

4,515

 

 

 

 

 

 

 

 

 

 

 

 

4,515

 

Employee stock purchase plan expense

 

 

 

 

 

 

 

 

 

 

115

 

 

 

 

 

 

 

 

 

 

 

 

115

 

Net unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

835

 

 

 

 

 

 

 

 

835

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(28,286

)

 

 

 

(28,286

)

Balances at March 31, 2023

 

 

40,438,320

 

 

$

 

3

 

 

$

 

413,213

 

 

$

 

(978

)

 

 

 

(237,263

)

 

$

 

174,975

 

 

See accompanying notes to the condensed consolidated financial statements.

 

2


Olema Pharmaceuticals, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(Amounts in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

 

(30,970

)

 

$

 

(28,286

)

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

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

 

88

 

 

 

 

100

 

Non-cash lease expense

 

 

 

288

 

 

 

 

327

 

Non-cash interest income on marketable securities

 

 

 

(2,355

)

 

 

 

(869

)

Stock-based compensation expense, including employee stock purchase plan expense

 

 

 

4,909

 

 

 

 

4,630

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

 

1,593

 

 

 

 

1,035

 

Other assets and long-term deposits

 

 

 

(1,343

)

 

 

 

 

Accounts payable

 

 

 

4,958

 

 

 

 

307

 

Other current liabilities

 

 

 

(404

)

 

 

 

2,691

 

Operating lease liabilities

 

 

 

(260

)

 

 

 

(326

)

Net cash used in operating activities

 

 

 

(23,496

)

 

 

 

(20,391

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of equipment

 

 

 

(153

)

 

 

 

 

Maturities of marketable securities

 

 

 

56,100

 

 

 

 

61,760

 

Purchases of marketable securities

 

 

 

(76,091

)

 

 

 

(24,373

)

Net cash (used in) provided by investing activities

 

 

 

(20,144

)

 

 

 

37,387

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Issuance of shares under at-the-market offering, net of issuance costs of $167

 

 

 

7,901

 

 

 

 

 

Proceeds from exercise of stock options

 

 

 

920

 

 

 

 

220

 

Net cash provided by financing activities

 

 

 

8,821

 

 

 

 

220

 

Net (decrease) increase in cash and cash equivalents

 

 

 

(34,819

)

 

 

 

17,216

 

Cash and cash equivalents at beginning of period

 

 

 

68,539

 

 

 

 

23,702

 

Cash and cash equivalents at end of period

 

$

 

33,720

 

 

$

 

40,918

 

 

See accompanying notes to the condensed consolidated financial statements.

 

 

2


Olema Pharmaceuticals, Inc.

Notes to condensed consolidated financial statements

(Unaudited)

1.
Nature of the Business and Basis of Presentation

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 one business segment and therefore has only one reportable segment. The Company is subject to risks and uncertainties common to early-stage companies in the biopharmaceutical industry, including, but not limited to, successful discovery and development of its product candidates, development by competitors of new technological innovations, dependence on key personnel, the ability to attract and retain qualified employees, protection of proprietary technology, compliance with governmental regulations, the impact of geopolitical and macroeconomic events discussed in further detail below, the ability to secure additional capital to fund operations and commercial success of its product candidates. Palazestrant, OP-3136 and any future product candidates the Company may develop will require extensive nonclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel, and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

Liquidity

The Company had $249.0 million of cash, cash equivalents and marketable securities at March 31, 2024, in addition to an available balance of $25.0 million under the Loan and Security Agreement (the “Loan Agreement”), by and between the Company, as borrower, and Silicon Valley Bank, a division of First-Citizens Bank & Trust Company (the “Bank”). Management believes that the Company’s cash, cash equivalents, marketable securities, and the amounts available under the Loan Agreement will be sufficient to fund the Company’s current operating plan for at least the next 12 months from the filing date of these condensed consolidated financial statements.

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 $150.0 million (the “ATM Shares”). The sales of the ATM Shares will be made by any method permitted that is deemed to be an "at-the-market" equity offering as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended ("Securities Act"), including sales made directly on or through the Nasdaq Global Select Market. The Company has agreed to pay TD Cowen a commission of up to 3.0% of the aggregate gross proceeds from any ATM Shares sold by TD Cowen.

During the three months ended March 31, 2024, the Company issued 546,326 shares of its common stock under the Sales Agreement at a weighted-average price of $15.00 per share for net proceeds of $7.9 million

 

3


after deducting related issuance costs. As of March 31, 2024, approximately $141.8 million remained available for issuance under the Sales Agreement.

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.

2.
Summary of Significant Accounting Policies

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 March 31, 2024, and the statements of operations and comprehensive loss, stockholders’ equity and cash flows for the three months ended March 31, 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-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 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.

 

4


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 March 31, 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, securing and protecting proprietary technology, strategic relationships, dependence on key individuals or sole-source suppliers, and geopolitical and macroeconomic factors.

 

5


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 nonclinical 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 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.

 

6


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 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

 

7


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

There were no new accounting pronouncements that were relevant to the Company as of and for the three months ended March 31, 2024.

 

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:

Level 1 — Inputs are unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.
Level 2 — Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 — Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

 

 

8


 

 

 

March 31, 2024

 

(in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Financial Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

 

8,779

 

 

$

 

 

 

$

 

 

 

$

 

8,779

 

Money market funds

 

 

 

18,173

 

 

 

 

 

 

 

 

 

 

 

 

18,173

 

Commercial paper

 

 

 

 

 

 

 

105,710

 

 

 

 

 

 

 

 

105,710

 

Corporate bonds

 

 

 

 

 

 

 

15,167

 

 

 

 

 

 

 

 

15,167

 

U.S. government treasury bills

 

 

 

80,411

 

 

 

 

 

 

 

 

 

 

 

 

80,411

 

Government-sponsored enterprise securities

 

 

 

 

 

 

 

20,943

 

 

 

 

 

 

 

 

20,943

 

Total

 

$

 

107,363

 

 

$

 

141,820

 

 

$

 

 

 

$

 

249,183

 

 

 

 

 

December 31, 2023

 

(in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Financial Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

 

3,570

 

 

$

 

 

 

$

 

 

 

$

 

3,570

 

Money market funds

 

 

 

59,280

 

 

 

 

 

 

 

 

 

 

 

 

59,280

 

Commercial paper

 

 

 

 

 

 

 

105,017

 

 

 

 

 

 

 

 

105,017

 

Corporate bonds

 

 

 

 

 

 

 

12,627

 

 

 

 

 

 

 

 

12,627

 

U.S. government treasury bills

 

 

 

60,012

 

 

 

 

 

 

 

 

 

 

 

 

60,012

 

Government-sponsored enterprise securities

 

 

 

 

 

 

 

21,606

 

 

 

 

 

 

 

 

21,606

 

Total

 

$

 

122,862

 

 

$

 

139,250

 

 

$

 

 

 

$

 

262,112

 

 

 

 

March 31, 2024

 

 

 

 

 

 

 

Gross

 

 

Gross

 

 

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Estimated

 

(in thousands)

 

Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

Financial Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 

33,926

 

 

$

 

 

 

$

 

 

 

$

 

33,926

 

Short-term marketable securities (<12 months to maturity)

 

 

 

190,213

 

 

 

 

44

 

 

 

 

(86

)

 

 

 

190,171

 

Long-term marketable securities (>12 months to maturity)

 

 

 

25,054

 

 

 

 

51

 

 

 

 

(19

)

 

 

 

25,086

 

Total

 

$

 

249,193

 

 

$

 

95

 

 

$

 

(105

)

 

$

 

249,183

 

 

 

 

December 31, 2023

 

 

 

 

 

 

 

Gross

 

 

Gross

 

 

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Estimated

 

(in thousands)

 

Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

Financial Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 

68,844

 

 

$

 

 

 

$

 

 

 

$

 

68,844

 

Short-term marketable securities (<12 months to maturity)

 

 

 

169,966

 

 

 

 

176

 

 

 

 

(8

)

 

 

 

170,134

 

Long-term marketable securities (>12 months to maturity)

 

 

 

22,955

 

 

 

 

179

 

 

 

 

 

 

 

 

23,134

 

Total

 

$

 

261,765

 

 

$

 

355

 

 

$

 

(8

)

 

$

 

262,112

 

 

The Company considers its marketable securities with maturities beyond one year as current assets, based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations. The Company considers its investment portfolio of marketable securities to be available-for-sale.

The Company periodically reviews its available-for-sale marketable securities for other-than-temporary impairment. The Company considers factors such as the duration, severity and the reason for the decline in value, the potential recovery period and its intent to sell. For debt securities, the Company also considers whether (i) it is more likely than not that the Company will be required to sell the debt securities before recovery of their amortized cost basis, and (ii) the amortized cost basis cannot be recovered as a result of credit losses.

 

9


There were no marketable securities that had been in a consecutive loss position for more than 12 months as of March 31, 2024. During the three months ended March 31, 2024, the Company did not recognize any other-than-temporary impairment loss. As of March 31, 2024, there was no allowance for losses on available-for-sale debt securities attributable to credit risk.

As of March 31, 2024, all of the Company’s cash and cash equivalents consisted of cash on deposit with U.S. banks denominated in U. S. dollars and Australian dollars.

4.
Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Prepaid insurance

 

 

 

887

 

 

 

 

1,239

 

Prepaid clinical development costs

 

 

 

858

 

 

 

 

858

 

Interest receivable

 

 

 

664

 

 

 

 

673

 

Prepaid subscriptions and licenses

 

 

 

527

 

 

 

 

255

 

Other

 

 

 

177

 

 

 

 

190

 

Reimbursable research and development costs from a collaboration partner

 

 

 

 

 

 

 

1,491

 

Total

 

$

 

3,113

 

 

$

 

4,706

 

 

5.
Other Assets and Long-Term Deposits

Other assets and long-term deposits consisted of the following (in thousands):

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Clinical development project deposits

 

$

 

8,031

 

 

$

 

6,688

 

Property and equipment, net

 

 

 

1,033

 

 

 

 

968

 

Security deposits

 

 

 

485

 

 

 

 

485

 

Total

 

$

 

9,549

 

 

$

 

8,141

 

 

6.
Accrued and Other Current Liabilities

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

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Accrued research and development related costs

 

$

 

14,098

 

 

$

 

11,322

 

Accrued employee bonuses

 

 

 

1,254

 

 

 

 

5,465

 

Accrued professional fees

 

 

 

1,085

 

 

 

 

903

 

Accrued payroll related costs

 

 

 

983

 

 

 

 

172

 

Accrued taxes

 

 

 

91

 

 

 

 

73

 

Total

 

$

 

17,511

 

 

$

 

17,935

 

 

7.
Stock-Based Compensation

In 2014, the Company’s Board of Directors (the “Board”) and stockholders approved and adopted the Company’s 2014 Stock Plan (the “2014 Plan”). The 2014 Plan permitted the grant of options and restricted stock awards (including restricted stock purchase rights and restricted stock bonus awards). The 2014 Plan was terminated on the date the Company’s 2020 Equity Incentive Plan (the “2020 Plan”), which is described below, became effective, and since that date, no additional awards have been or will be made pursuant to the 2014 Plan. However, any outstanding awards granted under the 2014 Plan will remain outstanding, subject to the terms of the 2014 Plan award agreements, until such outstanding options are exercised or until any awards terminate or expire by their terms.

 

10


In 2020, the Board and the Company’s stockholders approved and adopted the 2020 Plan. The 2020 Plan permits the grant of options, restricted stock awards, stock appreciation rights, restricted stock unit awards, performance awards, and other awards. The maximum number of shares of common stock that were initially issuable under the 2020 Plan was a number not to exceed 6,494,510 shares of the Company’s common stock, which is the sum of (i) 2,152,080 new shares, plus (ii) an additional number of shares not to exceed 4,342,430 shares, consisting of any shares of the Company’s common stock subject to outstanding stock options or other stock awards granted under the 2014 Plan that, on or after the date on which the 2020 Plan became effective, terminated or expired prior to exercise or settlement; were not issued because the award was settled in cash; were forfeited because of the failure to vest; or were reacquired or withheld (or not issued) to satisfy a tax withholding obligation or the purchase or exercise price. In addition, the number of shares of the Company’s common stock reserved for issuance under the 2020 Plan automatically increases on January 1 of each year for a period of ten years, beginning on January 1, 2021 and continuing through January 1, 2030, in an amount equal to the lesser of (1) 5% of the total number of shares of the Company’s common stock outstanding on December 31 of the immediately preceding year, or (2) a lesser number of shares determined by the Board no later than December 31 of the immediately preceding year.

In 2022, the Board approved and adopted the Company’s 2022 Inducement Plan (the “2022 Inducement Plan”). Under the 2022 Inducement Plan, initially 2,000,000 shares of common stock were reserved for issuance. The 2022 Inducement Plan permits the grant of options, restricted stock awards, stock appreciation rights, restricted stock unit awards, performance awards, and other awards.

The exercise price for each option and stock appreciation right shall be established at the discretion of the Board, provided that the exercise price of a stock option will not be less than 100% of the fair market value of the Company’s common stock on the date of grant. Specific vesting for stock options and stock appreciation rights is service related and determined in each award agreement, where stock options and stock appreciation rights are fully vested at the grant date or follow a graded vesting schedule. Stock options and stock appreciation rights granted under the plans generally expire ten years after the date of grant.

Stock Option Valuation

The fair value of stock option grants is estimated using the Black-Scholes option-pricing model. The Company lacks company-specific historical and implied volatility information. Therefore, it estimated its expected stock volatility based on the historical volatility of a publicly traded set of peer companies in addition to its own historical volatility. For options with service-based vesting conditions, the expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The expected term of stock options granted to nonemployees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is 0% since the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

The assumptions that the Company used to determine the estimated grant-date fair value of stock options granted to employees and directors under the 2020 Plan and the 2022 Inducement Plan were as follows, presented as a weighted average:

 

 

March 31,

 

 

March 31,

 

 

2024

 

 

2023

 

Risk-free interest rate

 

 

3.82

%

 

 

 

3.48

%

Expected term (in years)

 

 

6.08

 

 

 

 

6.08

 

Expected volatility

 

 

85.36

%

 

 

 

87.22

%

Expected dividend yield

 

 

 

 

 

 

 

 

 

11


Stock Option Activity

The following table summarizes the stock option activity under the 2014 Plan, the 2020 Plan and the 2022 Inducement Plan:

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

Average

 

 

 

 

 

 

 

 

 

 

Average

 

 

Remaining

 

 

Aggregate

 

 

 

Number of

 

 

Exercise

 

 

Contractual

 

 

Intrinsic

 

 

 

Shares

 

 

Price

 

 

Term

 

 

Value

 

 

 

 

 

 

 

 

 

(in years)

 

 

(in thousands)

 

Outstanding as of December 31, 2023

 

 

8,670,742

 

 

$

 

8.52

 

 

 

7.60

 

 

$

 

61,749

 

Granted

 

 

2,530,750

 

 

 

 

15.24

 

 

 

 

 

 

Exercised (1)

 

 

(308,574

)

 

 

 

3.85

 

 

 

 

 

 

Forfeited

 

 

(106,016

)

 

 

 

21.06

 

 

 

 

 

 

Outstanding as of March 31, 2024

 

 

10,786,902

 

 

$

 

10.11

 

 

 

8.08

 

 

$