Oric Pharmaceuticals, Inc. [ORIC] Filings

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

10-Q 1 oric-20240630.htm 10-Q 10-Q

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 June 30, 2024


☐	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: 001-39269

ORIC PHARMACEUTICALS, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware	47-1787157
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
240 E. Grand Ave, 2nd Floor South San Francisco, CA	94080
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (650) 388-5600

Not applicable

(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

    Trading
Symbol(s)

    Name of each exchange on which registered

    Common Stock, $0.0001 par value per share

    ORIC

    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.

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 July 31, 2024, the registrant had 70,542,476 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3
	Balance Sheets	3
	Statements of Operations and Comprehensive Loss	4
	Statements of Stockholders’ Equity	5
	Statements of Cash Flows	6
	Notes to Unaudited Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4.	Controls and Procedures	21

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	74
Item 3.	Defaults Upon Senior Securities	74
Item 4.	Mine Safety Disclosures	74
Item 5.	Other Information	74
Item 6.	Exhibits	76
SIGNATURES		77

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains forward-looking statements. All statements other than statements of historical facts contained in this quarterly report on Form10-Q, including statements regarding our future results of operations and financial position, business strategy, development plans, planned preclinical studies and clinical trials, future results of clinical trials, expected research and development costs, regulatory strategy, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this quarterly report on Form 10-Q include, but are not limited to, statements about:

•

the ability of our clinical trials to demonstrate safety and efficacy of our product candidates, and other positive results;

•

the timing, progress and results of preclinical studies and clinical trials for ORIC-114, ORIC-944, ORIC-533 and other product candidates we may develop, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available, and our research and development programs;

•

the timing, scope and likelihood of regulatory filings and approvals, including timing of Investigational New Drug (IND), or Clinical Trial Application (CTA), applications and final Food and Drug Administration (FDA), approval of ORIC-114, ORIC-944, ORIC-533 and any other future product candidates;

•

the potential benefits of and activity under the company’s collaboration, licenses and other third-party agreements;

•

the timing, scope or likelihood of foreign regulatory filings and approvals;

•

our ability to develop and advance our current product candidates and programs into, and successfully complete, clinical studies;

•

our manufacturing, commercialization, and marketing capabilities and strategy;

•

our plans relating to commercializing our product candidates, if approved, including the geographic areas of focus and sales strategy;

•

the need to hire additional personnel and our ability to attract and retain such personnel;

•

our expectations regarding the impact of a global pandemic or other public health emergencies on our business;

•

the size of the market opportunity for our product candidates, including our estimates of the number of patients who suffer from the diseases we are targeting;

•

our expectations regarding the approval and use of our product candidates in combination with other drugs;

•

our competitive position and the success of competing therapies that are or may become available;

•

our estimates of the number of patients that we will enroll in our clinical trials;

•

the beneficial characteristics, safety, efficacy and therapeutic effects of our product candidates;

•

our ability to obtain and maintain regulatory approval of our product candidates;

•

our plans relating to the further development of our product candidates, including additional indications we may pursue;

•

existing regulations and regulatory developments in the United States, Europe and other jurisdictions;

•

our intellectual property position, including the scope of protection we are able to establish and maintain for intellectual property rights covering ORIC-114, ORIC-944, ORIC-533 and other product candidates we may develop, including the extensions of existing patent terms where available, the validity of intellectual property rights held by third parties, and our ability not to infringe, misappropriate or otherwise violate any third-party intellectual property rights;

•

our continued reliance on third parties to conduct additional clinical trials of our product candidates, and for the manufacture of our product candidates for preclinical studies and clinical trials;

•

our ability to obtain, and negotiate favorable terms of, any collaboration, licensing or other arrangements that may be necessary or desirable to develop, manufacture or commercialize our product candidates;

•

the pricing and reimbursement of ORIC-114, ORIC-944, ORIC-533 and other product candidates we may develop, if approved;

•

the rate and degree of market acceptance and clinical utility of ORIC-114, ORIC-944, ORIC-533 and other product candidates we may develop;

•

our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

•

our financial performance;

•

the period over which we estimate our existing cash, cash equivalents and investments will be sufficient to fund our operating plan;

•

the impact of laws and regulations;

•

our expectations regarding the period during which we will qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (JOBS Act); and

•

our anticipated use of our existing resources.

We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we believe may affect our business, financial condition, results of operations and prospects, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this quarterly report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk factors” and elsewhere in this quarterly report on Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this quarterly report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

Part I – FINANCIAL INFORMATION

Item 1. Financial Statements.

ORIC PHARMACEUTICALS, INC.

BALANCE SHEETS

(in thousands, except share and per share amounts)



	June 30, 2024			December 31, 2023
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	49,831		$	23,384
Short-term investments		236,575			184,803
Prepaid expenses and other current assets		8,193			4,410
Total current assets		294,599			212,597

Long-term investments		22,126			26,852
Property and equipment, net		2,878			2,862
Other assets		9,303			9,696
Total assets	$	328,906		$	252,007

Liabilities and Stockholders' Equity

Current liabilities:
Accounts payable	$	2,309		$	944
Accrued liabilities		17,230			19,514
Total current liabilities		19,539			20,458

Other long-term liabilities		6,967			7,461
Total liabilities		26,506			27,919

Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.0001 par value; 200,000,000 shares authorized; no shares issued and outstanding at June 30, 2024 and December 31, 2023		—			—
Common stock, $0.0001 par value; 1,000,000,000 shares authorized; 67,672,303 and 54,865,553 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively		7			6
Additional paid-in capital		794,550			658,751
Accumulated deficit		(491,901	)		(434,927	)
Accumulated other comprehensive (loss) income		(256	)		258
Total stockholders' equity		302,400			224,088
Total liabilities and stockholders' equity	$	328,906		$	252,007

See accompanying notes to unaudited financial statements.

ORIC PHARMACEUTICALS, INC.

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(in thousands, except share and per share amounts)


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Operating expenses:
Research and development	$	28,940		$	18,787		$	50,900		$	38,303
General and administrative		7,077			6,205			14,107			12,367
Total operating expenses		36,017			24,992			65,007			50,670
Loss from operations		(36,017	)		(24,992	)		(65,007	)		(50,670	)

Other income, net		4,054			2,048			8,033			3,781
Net loss	$	(31,963	)	$	(22,944	)	$	(56,974	)	$	(46,889	)
Other comprehensive (loss) income:
Unrealized (loss) gain on investments		(94	)		(68	)		(514	)		724
Comprehensive loss	$	(32,057	)	$	(23,012	)	$	(57,488	)	$	(46,165	)
Net loss per share, basic and diluted	$	(0.45	)	$	(0.50	)	$	(0.83	)	$	(1.03	)
Weighted-average shares outstanding, basic and diluted		70,348,414			45,654,208			68,848,981			45,373,745

See accompanying notes to unaudited financial statements.

ORIC PHARMACEUTICALS, INC.

STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(in thousands, except share amounts)


	Common Stock				Additional Paid-in		Accumulated			Accumulated Other Comprehensive			Total Stockholders'
	Shares		Amount		Capital		Deficit			Income (Loss)			Equity
Balance at December 31, 2023		54,865,553	$	6	$	658,751	$	(434,927	)	$	258		$	224,088
Issuance of common stock, net		12,500,000		1		124,831		—			—			124,832
Exercise of common stock options		51,540		—		198		—			—			198
Issuance of common stock upon vesting of RSUs		3,245		—		—		—			—			—
Stock-based compensation expense		—		—		4,958		—			—			4,958
Unrealized loss on investments		—		—		—		—			(420	)		(420	)
Net loss		—		—		—		(25,011	)		—			(25,011	)
Balance at March 31, 2024		67,420,338	$	7	$	788,738	$	(459,938	)	$	(162	)	$	328,645
Exercise of common stock options		71,936		—		293		—			—			293
Issuance of common stock upon vesting of RSUs		10,780		—		—		—			—			—
Issuance of common stock from ESPP		169,249		—		523		—			—			523
Stock-based compensation expense		—		—		4,996		—			—			4,996
Unrealized loss on investments		—		—		—		—			(94	)		(94	)
Net loss		—		—		—		(31,963	)		—			(31,963	)
Balance at June 30, 2024		67,672,303	$	7	$	794,550	$	(491,901	)	$	(256	)	$	302,400


	Common Stock				Additional Paid-in		Accumulated			Accumulated Other Comprehensive			Total Stockholders'
	Shares		Amount		Capital		Deficit			Income (Loss)			Equity
Balance at December 31, 2022		45,089,537	$	5	$	557,867	$	(334,230	)	$	(1,291	)	$	222,351
Exercise of common stock options		16		—		—		—			—			—
Issuance of common stock upon vesting of RSUs		1,662		—		—		—			—			—
Stock-based compensation expense		—		—		3,614		—			—			3,614
Unrealized gain on investments		—		—		—		—			792			792
Net loss		—		—		—		(23,945	)		—			(23,945	)
Balance at March 31, 2023		45,091,215	$	5	$	561,481	$	(358,175	)	$	(499	)	$	202,812
Issuance of common stock and pre-funded warrants, net		9,285,710		1		84,773		—			—			84,774
Issuance of common stock upon vesting of RSUs		9,308		—		—		—			—			—
Issuance of common stock from ESPP		145,938		—		400		—			—			400
Stock-based compensation expense		—		—		3,825		—			—			3,825
Unrealized loss on investments		—		—		—		—			(68	)		(68	)
Net loss		—		—		—		(22,944	)		—			(22,944	)
Balance at June 30, 2023		54,532,171	$	6	$	650,479	$	(381,119	)	$	(567	)	$	268,799

See accompanying notes to unaudited financial statements.

ORIC PHARMACEUTICALS, INC.

STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)


	Six Months Ended June 30,
	2024			2023
Cash flows from operating activities:
Net loss	$	(56,974	)	$	(46,889	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		533			512
Stock-based compensation expense		9,954			7,439
Loss on fixed asset disposals		—			9
Accretion of discount on investments, net		(4,523	)		(2,124	)
Changes in operating assets and liabilities:
Prepaid expenses and other assets		(2,843	)		892
Accounts payable and accrued other liabilities		(1,958	)		(1,612	)
Net cash used in operating activities		(55,811	)		(41,773	)

Cash flows from investing activities:
Acquisitions of property and equipment		(551	)		(715	)
Purchases of investments		(163,282	)		(99,285	)
Maturities of investments		120,245			93,465
Net cash used in investing activities		(43,588	)		(6,535	)

Cash flows from financing activities:
Proceeds from issuance of common stock and pre-funded warrants		125,000			85,000
Issuance costs associated with financings		(168	)		(226	)
Proceeds from issuance of common stock under ESPP		523			400
Proceeds from stock option exercises		491			—
Net cash provided by financing activities		125,846		$	85,174

Net increase in cash, cash equivalents and restricted cash		26,447			36,866

Cash, cash equivalents and restricted cash at beginning of period		23,875			67,308
Cash, cash equivalents and restricted cash at end of period	$	50,322		$	104,174

The following table provides a reconciliation of cash, cash equivalents and restricted cash within the balance sheets to the amounts shown in the statements of cash flows above, in thousands:


	June 30,
	2024		2023
Cash and cash equivalents	$	49,831	$	103,683
Restricted cash included in other assets		491		491
Total cash, cash equivalents and restricted cash	$	50,322	$	104,174

See accompanying notes to unaudited financial statements.

ORIC PHARMACEUTICALS, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

1. Description of the Business

ORIC Pharmaceuticals, Inc. (ORIC or the Company) is a clinical-stage biopharmaceutical company dedicated to improving patients’ lives by Overcoming Resistance In Cancer. The Company was incorporated in Delaware in August 2014 and has offices in South San Francisco and San Diego, California. The Company’s principal operations are in the United States and the Company operates in one segment.

Since inception, the Company has devoted its primary efforts to raising capital, internal research and development activities and business development efforts, and has incurred significant operating losses and negative cash flows from operations. In August 2020, the Company licensed from Mirati Therapeutics, Inc. (Mirati) development and commercialization rights to an allosteric inhibitor program directed towards the polycomb repressive complex 2 (PRC2) and in October 2020, the Company licensed from Voronoi Inc. (Voronoi) development and commercialization rights to a brain penetrant, orally bioavailable, irreversible inhibitor designed to selectively target epidermal growth factor receptor (EGFR) and human epidermal growth factor receptor 2 (HER2) with high potency against exon 20 insertion mutations.

As of June 30, 2024, the Company had an accumulated deficit of $491.9 million. Through June 30, 2024, all of the Company’s financial support has been provided by proceeds from the issuance of common stock and convertible preferred stock.

As the Company continues its expansion, it may seek additional financing and/or strategic investments, however, there can be no assurance that any additional financing or strategic investments will be available to the Company on acceptable terms, if at all. If events or circumstances occur such that the Company does not obtain additional funding, it will most likely be required to reduce its plans and/or certain discretionary spending, which could have a material adverse effect on the Company’s ability to achieve its intended business objectives. The accompanying financial statements do not include any adjustments that might be necessary if it were unable to continue as a going concern. Management believes that it has sufficient working capital on hand to fund operations through at least the next twelve months from the date of the issuance of these financial statements.

At-The-Market Sales Agreement and Offering

The Company previously entered into an “at the market” (ATM) sales agreement with Jefferies LLC as the Company’s sales agent, to sell shares of the Company’s common stock. On March 11, 2024, pursuant to the terms of the ATM sales agreement, the Company filed a Form S-3ASR and prospectus supplement, to allow the Company to sell from time to time up to $200 million of shares of the Company’s common stock in negotiated transactions or transactions deemed to be an ATM offering.

Private Placements

On January 20, 2024, the Company entered into a securities purchase agreement with a select group of institutional and accredited healthcare specialist investors for the private placement of 12,500,000 shares of common stock at a price of $10.00 per share, resulting in gross proceeds of $125.0 million. The purchase price per share represents a premium to ORIC's 5-day trailing average stock price at the time of sale. After deducting expenses related to the private placement of $0.2 million, the net proceeds to the Company from the private placement were $124.8 million. The private placement closed on January 23, 2024. On January 26, 2024, the Company filed a Form S-3 registering the shares sold in the private placement. The Form S-3 was declared effective by the SEC on February 2, 2024.

On June 24, 2023, the Company entered into a securities purchase agreement with a select group of institutional and accredited healthcare specialist investors for the private placement of 9,285,710 shares of common stock at a price of $7.00 per share and pre-funded warrants to purchase 2,857,142 shares of common stock at a purchase price of $6.9999 per pre-funded warrant, resulting in gross proceeds of $85.0 million. The purchase price per share represents a premium to the market price at the time of sale. After deducting expenses related to the private placement of $0.2 million, the net proceeds to the Company from the private placement were $84.8 million. The private placement closed on June 27, 2023. On December 15, 2023, the Company filed a Form S-3 registering the shares sold and the shares underlying the pre-funded warrants sold in the private placement. The Form S-3 was declared effective by the SEC on December 28, 2023. On July 8, 2024, all pre-funded warrants were exercised at an exercise price of $0.0001 per share of common stock.

2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions of the Securities and Exchange Commission (SEC) on Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP, have been omitted. The accompanying unaudited financial statements include all known adjustments necessary for a fair presentation of the results as required by GAAP. These adjustments consist

primarily of normal recurring accruals and estimates that impact the carrying value of assets and liabilities. Operating results for the interim period are not necessarily indicative of future results.

The accompanying unaudited financial statements should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2023, which are included in the Company’s Annual Report on Form 10-K filed with the SEC. Furthermore, the Company’s significant accounting policies are disclosed in the audited financial statements for the periods ended December 31, 2023 and 2022, included in the Company’s Annual Report on Form 10-K. Since the date of those financial statements, there have been no changes to its significant accounting policies.

Recently Issued Accounting Pronouncements

There are no recently issued accounting pronouncements that would materially impact the Company’s financial statements and related disclosures.

3. License Agreements and Clinical Development Collaboration

Bayer and Johnson & Johnson collaboration

On May 14, 2024, the Company entered into a clinical trial collaboration and supply agreement with Bayer Consumer Care AG (Bayer), to evaluate ORIC-944 in combination with Nubeqa® (darolutamide), Bayer’s androgen receptor (AR) inhibitor. On July 10, 2024, the Company entered into a clinical trial collaboration and supply agreement with Janssen Research & Development, LLC, a Johnson & Johnson company (Johnson & Johnson), to evaluate ORIC 944 in combination with Erleada® (apalutamide), Johnson & Johnson’s AR inhibitor. The Company will continue to conduct and sponsor the ongoing Phase 1b trial, and Bayer and Johnson & Johnson will provide darolutamide and apalutamide, respectively, for the study. The Company will maintain full economic ownership and control of ORIC-944.

Pfizer collaboration

On December 21, 2022, the Company entered into a clinical development collaboration (the Pfizer Collaboration) for a potential Phase 2 study of ORIC-533 in multiple myeloma with Pfizer. Through the Pfizer Collaboration, the Company plans to potentially advance ORIC-533 into a Phase 2 combination study with elranatamab, Pfizer’s investigational B-cell maturation antigen (BCMA) CD3-targeted bispecific antibody in development for the treatment of multiple myeloma. The Company will maintain full economic ownership and control of ORIC-533.

Concurrent with the Pfizer Collaboration, the Company sold 5,376,344 shares of common stock at a price of $4.65 per share to Pfizer for proceeds of $25.0 million. The common shares were sold to Pfizer in a registered direct offering conducted without an underwriter or placement agent. The transaction closed on December 23, 2022.

Voronoi License Agreement

On October 19, 2020, the Company entered into a license and collaboration agreement (Voronoi License Agreement) with Voronoi. The Voronoi License Agreement gives the Company access to Voronoi’s preclinical stage EGFR and HER2 exon 20 insertion mutation program, including a lead product candidate now designated as ORIC-114. Under the Voronoi License Agreement, Voronoi granted the Company an exclusive, sublicensable license under Voronoi’s rights to certain patent applications directed to certain small molecule compounds that bind to EGFR and HER2 with one or more exon 20 insertion mutations and certain related know-how, in each case, to develop and commercialize certain licensed compounds and licensed products incorporating any such compound in the ORIC Territory, defined as worldwide other than in the People’s Republic of China, Hong Kong, Macau and Taiwan. Under the Voronoi License Agreement, Voronoi had the right to perform certain mutually agreed upon development activities. Except for Voronoi's right to participate in such development activities, the Company is wholly responsible for development and commercialization of licensed products in the ORIC Territory. In addition, the Company is obligated to use commercially reasonable efforts to develop and commercialize at least one licensed product in certain major markets in the ORIC Territory.

The Company’s financial obligations under the Voronoi License Agreement included an upfront payment of $5.0 million in cash and the issuance to Voronoi of 283,259 shares of the Company’s common stock, valued at approximately $6.8 million, issued pursuant to a stock issuance agreement entered into between the parties on October 19, 2020. The number of shares issued pursuant to the stock issuance agreement was based on a price of $28.24 per share, representing a premium of 25% to the 30-day trailing volume

weighted average trading price of the Company’s common stock. The shares were issued in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended (Securities Act), for transactions by an issuer not involving any public offering.

Under the Voronoi License Agreement, Voronoi was responsible for certain research and development costs up to a predetermined threshold. Upon achievement of the predetermined threshold in the second quarter of 2022, Voronoi chose to opt out of participation in and funding of future development activities. The Company is also obligated to make milestone payments to Voronoi upon the achievement of certain events. Upon the achievement of certain development and regulatory milestones with respect to the first licensed product, the Company is obligated to pay Voronoi up to a maximum of $111.0 million. Upon the achievement of certain commercial milestones with respect to the first licensed product, the Company is obligated to pay Voronoi up to a maximum of $225.0 million. If the Company pursues a second licensed product, the Company could pay Voronoi up to an additional $272.0 million in success-based milestones. In addition, the Company is obligated to pay royalties on net sales of licensed products in the ORIC Territory. In the third quarter of 2022, the Company made a development milestone payment to Voronoi in the amount of $5.0 million, which was recorded in acquired in-process research and development expense.

Unless earlier terminated, the Voronoi License Agreement will continue in effect until the expiration of all royalty payment obligations. Following the expiration of the Voronoi License Agreement, the Company will retain its licenses under the intellectual property Voronoi licensed to it on a royalty-free basis. The Company and Voronoi may each terminate the Voronoi License Agreement if the other party materially breaches the terms of such agreement, subject to specified notice and cure provisions, or enters into bankruptcy or insolvency proceedings. Voronoi may also terminate the agreement if the Company discontinues development of licensed products for a specified period of time. The Company also has the right to terminate the Voronoi License Agreement without cause by providing prior notice to Voronoi.

If Voronoi terminates the Voronoi License Agreement for cause, or if the Company terminates the Voronoi License Agreement without cause, then the Company is obligated to grant a nonexclusive license to Voronoi under certain of the Company’s patents and know-how and to assign to Voronoi certain of its regulatory filings for licensed compounds and licensed products.

Mirati License Agreement

On August 3, 2020, the Company entered into a license agreement (Mirati License Agreement) with Mirati. Under the Mirati License Agreement, Mirati granted the Company a worldwide, exclusive, sublicensable, royalty-free license under Mirati’s rights to certain patents and patent applications directed to certain small molecule compounds that bind to and inhibit PRC2 and certain related know-how, in each case, to develop and commercialize certain licensed compounds and licensed products incorporating any such compounds. Under the Mirati License Agreement, the Company is wholly responsible for development and commercialization of licensed products. In addition, the Company is obligated to use commercially reasonable efforts to develop and commercialize at least one licensed product in certain major markets.

The Company’s financial obligation under the Mirati License Agreement was an upfront payment of 588,235 shares of ORIC common stock, valued at approximately $13.0 million based upon the closing price of the Company’s common stock on the acquisition date. The number of shares issued was based on a price of $34.00 per share, representing a premium of 10% to the 60-day trailing volume-weighted average trading price of the Company’s common stock. The shares were issued in a private placement in reliance on Section 4(a)(2) of the Securities Act for transactions by an issuer not involving any public offering. During the eighteen-month period following the date of the agreement, Mirati was subject to certain transfer restrictions, and the parties agreed to negotiate and enter into a registration rights agreement, with respect to the shares. The Company is not obligated to pay Mirati milestones or royalties.

Unless earlier terminated, the Mirati License Agreement will continue in effect on a country-by-country and licensed product-by-licensed product basis until the later of (a) the expiration of the last valid claim of a licensed patent covering such licensed product in such country or (b) ten years after the first commercial sale of such licensed product in such country. Following the expiration of the Mirati License Agreement, the Company will retain its licenses under the intellectual property Mirati licensed to it on a royalty-free basis. ORIC and Mirati may each terminate the Mirati License Agreement if the other party materially breaches the terms of such agreement, subject to specified notice and cure provisions, or enters into bankruptcy or insolvency proceedings. Mirati may terminate the agreement if the Company challenges any of the patent rights licensed to the Company by Mirati or it discontinues development of licensed products for a specified period of time. The Company also has the right to terminate the Mirati License Agreement without cause by providing prior notice to Mirati.

On October 8, 2023, Bristol Myers Squibb (BMS) and Mirati announced that they entered into a definitive merger agreement under which BMS through a subsidiary will acquire all of the outstanding shares of Mirati common stock. The Mirati License Agreement continued in effect upon consummation of the transaction, which closed on January 23, 2024.

4. Property and Equipment, net

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


	June 30, 2024			December 31, 2023
Lab equipment	$	7,083		$	6,596
Leasehold improvements		1,993			1,967
Computer hardware and software		248			299
Furniture and fixtures		494			494
Total property and equipment, gross		9,818			9,356
Less accumulated depreciation		(6,940	)		(6,494	)
Total property and equipment, net	$	2,878		$	2,862

5. Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):



	June 30, 2024		December 31, 2023
Accrued clinical and manufacturing costs	$	9,718	$	9,436
Accrued compensation		4,106		6,529
Operating lease liabilities - short-term		2,770		2,752
Other accruals		636		797
Total accrued liabilities	$	17,230	$	19,514

6. Investments

The Company's available-for-sale investments consisted of the following (in thousands):


June 30, 2024	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
Short-term
U.S. treasury securities	$	236,820	$	1	$	(246	)	$	236,575
Short-term investments	$	236,820	$	1	$	(246	)	$	236,575

Long-term
U.S. treasury securities	$	22,137	$	—	$	(11	)	$	22,126
Long-term investments	$	22,137	$	—	$	(11	)	$	22,126

December 31, 2023
Short-term
U.S. treasury securities	$	181,947	$	180	$	(64	)	$	182,063
U.S. agency bonds		2,500		—		(4	)		2,496
Certificates of deposit		245		—		(1	)		244
Short-term investments	$	184,692	$	180	$	(69	)	$	184,803

Long-term
U.S. treasury securities	$	26,705	$	147	$	—		$	26,852
Long-term investments	$	26,705	$	147	$	—		$	26,852

The Company has determined that there were no material declines in fair value of its investments due to credit-related factors as of June 30, 2024 and December 31, 2023. Credit loss is limited due to the nature of the investments.

7. Fair Value Measurements

The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair-value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Observable inputs such as quoted prices in active markets;

Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The carrying amounts of the Company’s interest receivable, included in prepaid expenses and other current assets, accounts payable and accrued liabilities are generally considered to be representative of their fair value because of their short-term nature. The Company’s investments, which may include money market funds and available-for-sale investments consisting of U.S. treasury securities, certificates of deposit and high-quality, marketable debt instruments of corporations and government sponsored enterprises, are measured at fair value in accordance with the fair value hierarchy.

Following are the major categories of assets measured at fair value on a recurring basis (in thousands):


	Fair Value Measurements
	Fair Value		Level 1		Level 2		Level 3		Total
June 30, 2024
Money market funds (1)	$	49,831	$	49,831	$	—	$	—	$	49,831
U.S. treasury securities		258,701		258,701		—		—		258,701
Total	$	308,532	$	308,532	$	—	$	—	$	308,532
December 31, 2023
Money market funds (1)	$	23,384	$	23,384	$	—	$	—	$	23,384
U.S. treasury securities		208,915		208,915		—		—		208,915
U.S. agency bonds		2,496		—		2,496		—		2,496
Certificates of deposit		244		244		—		—		244
Total	$	235,039	$	232,543	$	2,496	$	—	$	235,039

(1) Included in cash and cash equivalents in accompanying balance sheets.

No transfers between levels occurred during either of the reporting periods presented.

8. Stockholders’ Equity and Stock-Based Compensation

As of June 30, 2024, there were 2,401,028 shares available for future issuance under the 2020 Equity Incentive Plan and 633,571 shares available for future issuance under the 2022 Inducement Equity Incentive Plan. The 2020 Equity Incentive Plan provides for the grants of stock options and other equity-based awards to employees, non-employee directors and consultants of the Company. The 2022 Inducement Equity Incentive Plan provides for the grants of equity-based awards to individuals not previously employees or non-employee directors of the Company.

The table below summarizes the total stock-based compensation expense included in the Company’s statements of operations and comprehensive loss for the periods presented (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Research and development	$	2,131	$	1,577	$	4,276	$	3,052
General and administrative		2,865		2,248		5,678		4,387
Total stock-based compensation expense	$	4,996	$	3,825	$	9,954	$	7,439

Stock Options

On June 21, 2022, the Company filed with the SEC a Tender Offer Statement on Schedule TO defining the terms and conditions of a one-time voluntary stock option exchange of certain eligible options for its employees (the Option Exchange). On July 20, 2022, the completion date of the Option Exchange, stock options covering an aggregate of 4,406,732 shares of common stock were tendered by eligible employees, and the Company granted new options at an exercise price of $4.36, the Company’s closing stock price on July 20, 2022, covering an aggregate of 4,406,732 shares of common stock under the 2020 Equity Incentive Plan in exchange for the tendered options. As a result of the Option Exchange, the Company will recognize incremental stock-based compensation expense of $3.7 million over the requisite service period of the new stock options, which is three or four years. The Company will recognize the sum of the incremental stock-based compensation expense and the remaining unrecognized compensation expense for the original awards on the modification date, over the requisite service period of the new stock options.

The following table summarizes the stock option activity for the six months ended June 30, 2024:


	Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2023		8,715,529		$	4.70
Granted		2,532,290		$	9.25
Exercised		(123,476	)	$	3.98
Forfeited and cancelled		(173,127	)	$	6.45
Outstanding at June 30, 2024		10,951,216		$	5.73		7.9	$	23,099
Exercisable at June 30, 2024		5,012,939		$	4.51		6.9	$	15,738

The fair value of stock option awards to employees, executives, directors, and other service providers was estimated at the date of grant using the Black-Scholes-Merton option pricing model with the following assumptions:


	Six Months Ended June 30,
	2024	2023
Risk-free interest rate	3.82% - 4.64%	3.45% - 4.03%
Expected volatility	85.63% - 86.31%	86.33% - 87.68%
Expected term (in years)	5.50 - 6.08	5.50 - 6.08
Expected dividend yield	0%	0%

The Company recognized stock-based compensation expense related to the vesting of stock options of $4.1 million and $3.2 million during the three months ended June 30, 2024 and 2023, respectively, and $8.2 million and $6.3 million during the six months ended June 30, 2024 and 2023, respectively. Total unrecognized compensation expense related to outstanding unvested stock-option awards as of June 30, 2024, was $37.7 million, which is expected to be recognized over a weighted-average remaining service period of 2.6 years.

Restricted Stock Units

The following table summarizes the restricted stock unit activity for the six months ended June 30, 2024:


	Number of Shares			Weighted- Average Grant-Date Fair Value
Outstanding at December 31, 2023		330,631		$	6.55
Granted		400,767		$	9.33
Vested		(14,025	)

Oric Pharmaceuticals, Inc. [ORIC] Filings
10-Q	[2024-08-12]
10-Q	[2024-05-06]
10-K	[2024-03-11]
10-Q	[2023-11-06]
10-Q	[2023-08-10]
10-Q	[2023-05-08]
10-K	[2023-03-16]
10-Q	[2022-11-07]
10-Q	[2022-08-11]
10-Q	[2022-05-09]
10-K	[2022-03-21]
10-Q	[2021-11-08]
10-Q	[2021-08-10]
10-Q	[2021-05-06]
10-K	[2021-03-23]
S-1	[2020-11-10]
10-Q	[2020-11-05]
10-Q	[2020-08-05]
10-Q	[2020-05-20]
S-1	[2020-02-28]