UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from _________________ to ___________________
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of November 1, 2024, there were
Table of Contents
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1 |
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PART I. |
3 |
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Item 1. |
3 |
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3 |
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Condensed Consolidated Statements of Operations and Comprehensive Loss |
4 |
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5 |
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6 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
7 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
16 |
Item 3. |
30 |
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Item 4. |
31 |
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PART II. |
32 |
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Item 1. |
32 |
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Item 1A. |
32 |
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Item 2. |
34 |
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Item 3. |
34 |
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Item 4. |
34 |
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Item 5. |
35 |
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Item 6. |
36 |
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i
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future financial condition, future operations, research and development costs, plans and objectives of management, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “positioned,” “potential,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report on Form 10-Q, we caution you that these statements are based on a combination of facts and factors currently known by us and our expectations of the future, about which we cannot be certain.
The forward-looking statements in this Quarterly Report on Form 10-Q include, among other things, statements about:
Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth, and involve known and unknown risks, uncertainties and other factors including, without limitation, risks, uncertainties and assumptions regarding the impact of the macroeconomic events on our business, operations, strategy, goals and
anticipated timelines, our ongoing and planned preclinical activities, our ability to initiate, enroll, conduct or complete ongoing and planned clinical trials, our timelines for regulatory submissions and our financial position that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You are urged to carefully review the disclosures we make concerning these risks and other factors that may affect our business and operating results in this Quarterly Report on Form 10-Q. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document. Except as required by law, we do not intend, and undertake no obligation, to update any forward-looking information to reflect events or circumstances.
2
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Repare Therapeutics Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands of U.S. dollars, except share data)
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As of |
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As of |
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2024 |
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2023 |
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ASSETS |
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CURRENT ASSETS: |
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Cash and cash equivalents |
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$ |
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$ |
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Marketable securities |
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Income tax receivable |
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Other current receivables |
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Prepaid expenses |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Income tax receivable |
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Other assets |
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TOTAL ASSETS |
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$ |
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$ |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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CURRENT LIABILITIES: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses and other current liabilities |
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Operating lease liability, current portion |
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Deferred revenue, current portion |
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Total current liabilities |
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Operating lease liability, net of current portion |
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Deferred revenue, net of current portion |
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TOTAL LIABILITIES |
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SHAREHOLDERS’ EQUITY |
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Preferred shares, |
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Common shares, |
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Additional paid-in capital |
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Accumulated other comprehensive income |
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Accumulated deficit |
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( |
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( |
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Total shareholders’ equity |
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
3
Repare Therapeutics Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
(Amounts in thousands of U.S. dollars, except share and per share data)
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Three Months Ended |
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Nine Months Ended |
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2024 |
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2023 |
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2024 |
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2023 |
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Revenue: |
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Collaboration agreements |
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$ |
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$ |
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$ |
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$ |
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Operating expenses: |
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Research and development, net of tax credits |
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General and administrative |
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Restructuring |
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Total operating expenses |
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Loss from operations |
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( |
) |
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( |
) |
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( |
) |
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( |
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Other income (expense), net |
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Realized and unrealized (loss) gain on foreign exchange |
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( |
) |
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( |
) |
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( |
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Interest income |
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Other expense |
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( |
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( |
) |
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( |
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( |
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Total other income, net |
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Loss before income taxes |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
Income tax (expense) recovery |
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( |
) |
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( |
) |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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$ |
( |
) |
Other comprehensive income: |
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Unrealized gain on available-for-sale marketable |
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$ |
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$ |
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$ |
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$ |
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Total other comprehensive income |
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Comprehensive loss |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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$ |
( |
) |
Net loss per share attributable to common shareholders - basic |
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$ |
( |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
Weighted-average common shares outstanding - basic and diluted |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
4
Repare Therapeutics Inc.
Condensed Consolidated Statements of Shareholders’ Equity
(Unaudited)
(Amounts in thousands of U.S. dollars, except share data)
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Common Shares |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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Shares |
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Amount |
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Capital |
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Income (Loss) |
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Deficit |
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Equity |
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Balance, |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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Share-based compensation |
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— |
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— |
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— |
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— |
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Exercise of stock options |
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( |
) |
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— |
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— |
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Issuance of common shares |
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( |
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— |
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— |
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Other comprehensive |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance, March 31, 2023 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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Share-based compensation |
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— |
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— |
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— |
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— |
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Exercise of stock options |
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( |
) |
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— |
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— |
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Other comprehensive |
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— |
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— |
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— |
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( |
) |
|
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— |
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( |
) |
Net loss |
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— |
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— |
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— |
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— |
|
|
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( |
) |
|
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( |
) |
Balance, June 30, 2023 |
|
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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||||
Share-based compensation |
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— |
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— |
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— |
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— |
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Exercise of stock options |
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( |
) |
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— |
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— |
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|||
Issuance of common shares |
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( |
) |
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— |
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— |
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Other comprehensive |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
|
|
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— |
|
|
|
( |
) |
|
|
( |
) |
Balance, |
|
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$ |
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$ |
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$ |
( |
) |
|
$ |
( |
) |
|
$ |
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||||
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||||||
Balance, |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Share-based compensation |
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— |
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— |
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— |
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— |
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Exercise of stock options |
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( |
) |
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— |
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— |
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Issuance of common shares |
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( |
) |
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— |
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— |
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— |
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Issuance of common shares |
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( |
) |
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— |
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— |
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|||
Other comprehensive loss |
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— |
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— |
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— |
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( |
) |
|
|
— |
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( |
) |
Net income |
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— |
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— |
|
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— |
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— |
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|
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||
Balance, March 31, 2024 |
|
|
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|
$ |
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$ |
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$ |
( |
) |
|
$ |
( |
) |
|
$ |
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||||
Share-based compensation |
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— |
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— |
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— |
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— |
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||
Exercise of stock options |
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— |
|
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— |
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— |
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— |
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— |
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Other comprehensive loss |
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— |
|
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— |
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— |
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|
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( |
) |
|
|
— |
|
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( |
) |
Net loss |
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— |
|
|
|
— |
|
|
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— |
|
|
|
— |
|
|
|
( |
) |
|
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( |
) |
Balance, June 30, 2024 |
|
|
|
|
$ |
|
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$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
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||||
Share-based compensation |
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— |
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— |
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|
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— |
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— |
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||
Issuance of common shares |
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( |
) |
|
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— |
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— |
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|||
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
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— |
|
|
|
|
|
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— |
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||
Net loss |
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— |
|
|
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— |
|
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— |
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|
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— |
|
|
|
( |
) |
|
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( |
) |
Balance, |
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$ |
|
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$ |
|
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$ |
|
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$ |
( |
) |
|
$ |
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|||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
5
Repare Therapeutics Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands of U.S. dollars)
|
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Nine Months Ended |
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2024 |
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2023 |
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Cash Flows From Operating Activities: |
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Net loss for the period |
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$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Share-based compensation expense |
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Depreciation expense |
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Non-cash lease expense |
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Foreign exchange (gain) loss |
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( |
) |
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Net accretion of marketable securities |
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( |
) |
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( |
) |
Changes in operating assets and liabilities: |
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Prepaid expenses |
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( |
) |
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Other current receivables |
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Other non-current assets |
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Accounts payable |
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Accrued expenses and other current liabilities |
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( |
) |
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( |
) |
Operating lease liability, current portion |
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( |
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Income taxes |
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( |
) |
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Operating lease liability, net of current portion |
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( |
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( |
) |
Deferred revenue |
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( |
) |
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( |
) |
Net cash used in operating activities |
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( |
) |
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( |
) |
Cash Flows From Investing Activities: |
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Purchases of property and equipment |
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( |
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Proceeds from maturities of marketable securities |
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Purchase of marketable securities |
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( |
) |
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( |
) |
Net cash provided by investing activities |
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Cash Flows From Financing Activities: |
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Proceeds from exercise of stock options |
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Proceeds from issuance of common stock under the 2020 Employee Share Purchase Plan |
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Net cash provided by financing activities |
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Effect of exchange rate fluctuations on cash held |
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( |
) |
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( |
) |
Net Decrease In Cash And Cash Equivalents |
|
|
( |
) |
|
|
( |
) |
Cash and cash equivalents at beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents at end of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Supplemental Disclosure Of Cash Flow Information: |
|
|
|
|
|
|
||
Property and equipment purchases incurred but not yet paid |
|
$ |
|
|
$ |
|
||
Right-of-use asset obtained in exchange for new operating lease liability |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
6
REPARE THERAPEUTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars, unless otherwise specified)
1. Organization and Nature of Business
Repare Therapeutics Inc. (“Repare” or the “Company”) is a precision medicine oncology company focused on the development of synthetic lethality-based therapies for patients with cancer. The Company is governed by the Business Corporations Act (Québec). The Company’s common shares are listed on the Nasdaq Global Select Market under the ticker symbol “RPTX”.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and as amended by Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).
The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements as of and for the year ended December 31, 2023, and, in the opinion of management, reflect all adjustments, consisting of normal recurring adjustments, necessary for the fair presentation of the Company’s consolidated financial position as of September 30, 2024, the consolidated results of its operations for the three and nine months ended September 30, 2024 and 2023, its statements of shareholders’ equity for the three and nine months ended September 30, 2024 and 2023 and its consolidated cash flows for the nine months ended September 30, 2024 and 2023.
These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the accompanying notes for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2024 (the “Annual Report”). The condensed consolidated balance sheet data as of December 31, 2023 presented for comparative purposes was derived from the Company’s audited consolidated financial statements but does not include all disclosures required by U.S. GAAP. The results for the three and nine months ended September 30, 2024 are not necessarily indicative of the operating results to be expected for the full year or for any other subsequent interim period.
The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2023 included in the Annual Report. There have been no changes to the Company's significant accounting policies since the date of the audited consolidated financial statements for the year ended December 31, 2023 included in the Annual Report.
Principles of Consolidation
These unaudited condensed consolidated financial statements of the Company include the accounts of the Company and its wholly-owned subsidiary, Repare Therapeutics USA Inc. (“Repare USA”), which was incorporated under the laws of Delaware on June 1, 2017. The financial statements of Repare USA are prepared for the same reporting period as the parent company, using consistent accounting policies. All intra-group transactions, balances, income, and expenses are eliminated in full upon consolidation.
Smaller Reporting Company
Repare qualified as a “smaller reporting company” under the Exchange Act as of June 30, 2024 because the market value of its common shares held by non-affiliates was less than $200 million as of June 30, 2024. As a smaller reporting company, Repare may rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. For so long as the Company remains a smaller reporting company, it is permitted and intends to rely on such exemptions from certain disclosure and other requirements that are applicable to other public companies that are not smaller reporting companies.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in consolidated financial statements and accompanying notes. Significant estimates and assumptions reflected in these unaudited condensed consolidated financial statements include, but are not limited to, estimates related to revenue recognition, accrued research and development expenses, share-based compensation and income taxes. The Company bases its estimates on historical experience and other market specific or other relevant assumptions that it believes to be reasonable under the
7
circumstances. Actual results could differ from those estimates. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known.
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2023, the FASB amended the guidance in ASU 280, Segment Reporting, to require a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Public entities with a single reportable segment are required to provide the new disclosures and all the disclosures currently required under ASC 280. The new guidance is effective for public entities in fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently assessing the impact of this amendment on its consolidated financial statements.
In December 2023, the FASB amended the guidance in ASU 740, Income Taxes, to provide disaggregated income tax disclosures on the rate reconciliation and income taxes paid. The new guidance is effective for public entities in fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently assessing the impact of this amendment on its consolidated financial statements.
3. Cash and Cash Equivalents and Marketable Securities
Cash and cash equivalents and marketable securities were comprised of the following:
|
|
Amortized Cost |
|
|
Unrealized Gains |
|
|
Unrealized Losses |
|
|
Fair Value |
|
||||
|
|
(in thousands) |
|
|||||||||||||
As of September 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Money market funds |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial paper |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total cash and cash equivalents: |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial paper |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Corporate debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total marketable securities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
As of December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Money market funds |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial paper |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total cash and cash equivalents: |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Treasury and government-sponsored |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Commercial paper |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total marketable securities |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Interest receivable was $
The Company held available-for-sale marketable securities with an aggregate fair value of
8
The Company recognized a net unrealized gain of $
The maturities of the Company’s marketable securities as of September 30, 2024 and December 31, 2023 are less than one year.
4. Fair Value Measurements
Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:
The following table presents information about the Company’s financial assets measured at fair value on a recurring basis and indicates the level of the fair value hierarchy utilized to determine such fair values:
Description |
|
Financial Assets |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
As of September 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
||
Commercial paper |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Total cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|||
Marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial paper |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Corporate debt securities |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Total marketable securities |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|||
Total financial assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
As of December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
||
Commercial paper |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Total cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|||
Marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Treasury and government-sponsored enterprises |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Commercial paper |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Total marketable securities |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|||
Total financial assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|||
When developing fair value estimates, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs. When available, the Company uses quoted market prices to measure the fair value. In determining the fair values at each date presented above, the Company relied on quoted prices for similar securities in active markets or using other inputs that are observable or can be corroborated by observable market data.
During the nine months ended September 30, 2024, there were
9
5. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following:
|
|
As of |
|
|
As of |
|
||
|
|
(in thousands) |
|
|||||
Accrued research and development expense |
|
$ |
|
|
$ |
|
||
Accrued compensation and benefits |
|
|
|
|
|
|
||
Accrued professional services |
|
|
|
|
|
|
||
Accrued restructuring expenses |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total accrued expenses and other current liabilities |
|
$ |
|
|
$ |
|
||
6. Restructuring Expenses
In August 2024, the Company announced a strategic reprioritization of the Company's research and development activities to focus its efforts on the advancement of its portfolio of clinical-stage oncology programs. As part of this strategic refocus, the Company reduced its overall workforce by approximately
7. Collaborative Arrangements
Debiopharm Clinical Study and Collaboration Agreement
In January 2024, the Company entered into a clinical study and collaboration agreement with Debiopharm International S.A. (“Debiopharm”), a privately-owned, Swiss-based biopharmaceutical company, with the aim to explore the synergy between the Company’s compound, lunresertib, and Debiopharm’s compound, Debio 0123, a WEE1 inhibitor (the “Debio Collaboration Agreement”). The Company and Debiopharm are collaborating on the development of a combination therapy, with the Company sponsoring the global study, and will share all costs equally. The Company and Debiopharm are each supplying their respective drugs and retain all commercial rights to their respective compounds, including as monotherapy or as combination therapies. The activities associated with the Debio Collaboration Agreement are coordinated by a joint steering committee, which is comprised of an equal number of representatives from the Company and Debiopharm.
Based on the terms of the Debio Collaboration Agreement, the Company concluded that the Debio Collaboration Agreement meets the requirements of a collaboration within the guidance of ASC 808, Collaborative Arrangements, as both parties are active participants in the combination trial and are exposed to significant risks and rewards depending on the success of the combination trial. Accordingly, the net costs associated with the co-development are expensed as incurred and recognized within research and development expenses in the condensed consolidated statement of operations and comprehensive loss.
During the three and nine months ended September 30, 2024, the Company recognized $
8. Revenue recognition from Collaboration and License Agreements
The following table presents revenue from collaboration agreements:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Roche Collaboration and License Agreement |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Bristol-Myers Squibb Collaboration and License Agreement |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Ono Collaboration Agreement |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
10
The Company’s revenue recognition accounting policy, as well as additional information on the Company’s collaboration and license agreements are disclosed in the audited consolidated financial statements for the year ended December 31, 2023 included in the Annual Report.
Roche Collaboration and License Agreement
In June 2022, the Company entered into a collaboration and license agreement (the “Roche Agreement”) with Hoffmann-La Roche Inc. and F. Hoffmann-La Roche Ltd (collectively, “Roche”) regarding the development and commercialization of the Company’s product candidate camonsertib (also known as RP-3500) and specified other Ataxia-Telangiectasia and Rad3-related protein kinase (“ATR”) inhibitors (the “Licensed Products”) which became effective July 13, 2022 (the “Effective Date”). Pursuant to the Roche Agreement, the Company granted Roche a worldwide, perpetual, exclusive, sublicensable license to develop, manufacture, and commercialize the Licensed Products, as well as a non-exclusive, sublicensable license to certain related companion diagnostics. The Company agreed to complete specified ongoing clinical trials in accordance with the development plan in the Roche Agreement, as well as ongoing investigator sponsored trials (together, the “Continuing Trials”) at the Company’s expense. Roche assumed all subsequent development of camonsertib with the potential to expand development into additional tumors and multiple combination studies. The Company retained the right to conduct specified clinical trials (the “Repare Trials”) of camonsertib in combination with the Company’s PKMYT1 compound, lunresertib (also known as RP-6306). The Roche Agreement provided the Company, at its sole discretion, with the ability to opt-in to a 50/50 U.S. co-development and profit share arrangement, including participation in U.S. co-promotion if U.S. regulatory approval was received. If the Company chose to exercise its co-development and profit share option, it would continue to be eligible to receive certain clinical, regulatory, commercial and sales milestone payments, in addition to full ex-U.S. royalties.
On February 7, 2024, the Company received written notice from Roche of their election to terminate the Roche Agreement following a review of Roche’s pipeline and evolving external factors. The termination became effective May 7, 2024, at which time the Company regained global development and commercialization rights for camonsertib from Roche.
In February 2024, the Company received a $
In March 2024, the Company received a further payment of $
Deferred revenue pertaining to the Roche Agreement |
|
Completion of Continuing Trials |
|
|
|
|
(in thousands) |
|
|
Balance as of December 31, 2023 |
|
$ |
|
|
Increase in collaboration revenue |
|
|
|
|
Recognition as revenue, as the result of performance obligations satisfied |
|
|
( |
) |
Balance as of September 30, 2024 |
|
$ |
|
|
The Company recognized
Bristol-Myers Squibb Collaboration and License Agreement
In May 2020, the Company entered into a collaboration and license agreement (the “BMS Agreement”) with Bristol-Myers Squibb Company (“Bristol-Myers Squibb”), pursuant to which the Company and Bristol-Myers Squibb have agreed to collaborate in the research and development of potential new product candidates for the treatment of cancer. The Company provided Bristol-Myers Squibb access to a selected number of its existing screening campaigns and novel campaigns. The Company was responsible for carrying out early-stage research activities directed to identifying potential targets for potential licensing by Bristol-Myers Squibb, in accordance with a mutually agreed upon research plan, and was solely responsible for such costs. The collaboration consisted of programs directed to both druggable targets and to targets commonly considered undruggable to traditional small molecule approaches. Upon Bristol-Myers Squibb’s election to exercise its option to obtain exclusive worldwide licenses for the subsequent development, manufacturing and commercialization of a program, Bristol-Myers Squibb will then be solely responsible for all such worldwide activities and costs.
11
Although the collaboration term expired in , the BMS Agreement will not expire until, on a licensed product-by-licensed product and country-by-country basis, the expiration of the applicable royalty term and in its entirety upon expiration of the last royalty term. Either party may terminate earlier upon an uncured material breach of the agreement by the other party, or the insolvency of the other party. Additionally, Bristol-Myers Squibb may terminate the BMS Agreement for any or no reason on a program-by-program basis upon specified written notice.
The Company is entitled to receive up to $
Deferred revenue pertaining to the BMS Agreement |
|
Options to license undruggable targets |
|
|
|
|
(in thousands) |
|
|
Balance as of December 31, 2023 |
|
$ |
|
|
Increase in collaboration revenue |
|
|
|
|
Recognition as revenue, as the result of performance obligations satisfied |
|
|
( |
) |
Balance as of September 30, 2024 |
|
$ |
|
|
In March 2024, Bristol-Myers Squibb exercised its one remaining option for an undruggable target. As a result, the Company recognized $
Ono Collaboration Agreement
In January 2019, the Company entered into a research services, license and collaboration agreement, (the “Ono Agreement”), with Ono Pharmaceutical Company Ltd., or (“Ono”), pursuant to which the Company and Ono agreed to collaborate in the research of potential product candidates targeting Polθ and the development of the Company’s small molecule Polθ inhibitor program. In June 2023, the Company and Ono determined not to further extend the term of the Ono Agreement. As a result, no product candidate would be licensed to Ono pursuant to the terms of the Ono Agreement. The Company recognized approximately $
9. Leases
The Company has historically entered into lease arrangements for its facilities. As of September 30, 2024, the Company had
In August 2024, the Company entered into a lease renewal agreement for office space in Cambridge, Massachusetts, for a
The Company evaluates its finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of assets may not be recoverable. Recoverability of these assets is measured by comparing their carrying value to the future net undiscounted cash flows the assets are expected to generate over their remaining economic life. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying value of the assets exceeds their fair value. During the third quarter of 2024, the Company determined the carrying value of the right-of-use asset related to the office and laboratory space in Montréal, Québec was no longer recoverable and wrote the balance down to its estimated fair value of nil. The resulting impairment loss of $
12
Operating Leases
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Operating Leases - Lease Costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating lease costs |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Short-term lease costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Variable lease costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total lease costs |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
Nine Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(in thousands, except as specified otherwise) |
|
|||||
Other Operating Lease Information |
|
|
|
|
|
|
||
Operating cash flows used for operating leases |
|
$ |
|
|
$ |
|
||
Right-of-use assets obtained in exchange for new operating lease liability |
|
$ |
|
|
$ |
|
||
Weighted-average remaining lease term (in years) |
|
|
|
|
|
|
||
Weighted-average discount rate |
|
|
% |
|
|
% |
||
10. Share-Based Compensation
2020 Employee Share Purchase Plan
In June 2020, the Company’s board of directors adopted, and the Company’s shareholders approved the 2020 Employee Share Purchase Plan (“ESPP”). The number of shares reserved and available for issuance under the ESPP will automatically increase each January 1, beginning on January 1, 2021 and each January 1 thereafter through January 31, 2030, by the lesser of (1)
The Company issued
As of September 30, 2024, the number of common shares that may be issued under the ESPP is
2020 Equity Incentive Plan
In June 2020, the Company’s board of directors adopted, and the Company’s shareholders approved the 2020 Equity Incentive Plan (the ”2020 Plan”). The 2020 Plan became effective on the effective date of the Company's initial public offering (the "IPO"), at which time the Company ceased making awards under the Option Plan. The 2020 Plan allows the Company’s compensation committee to make equity-based and cash-based incentive awards to the Company’s officers, employees, directors and consultants including but not limited to stock options and restricted share units. The aggregate number of common shares reserved and available for issuance under the 2020 Plan has automatically increased on January 1 of each year beginning on January 1, 2021 and will continue to increase on January 1 of each year through and including January 1, 2030, by
As of September 30, 2024, the number of common shares reserved for issuance under the 2020 Plan is
Inducement Plan
In April 2024, the Company’s board of directors approved the adoption of the 2024 Inducement Plan (the “Inducement Plan”), to be used exclusively for grants of awards to individuals who were not previously employees or directors (or following a bona fide period of non-employment) as a material inducement to such individuals’ entry into employment with the Company, pursuant to Nasdaq Listing
13
Rule 5635(c)(4). The terms and conditions of the Inducement Plan are substantially similar to those of the 2020 Plan.
Stock Options
The following table summarizes the Company’s stock options activity:
|
|
Number of |
|
|
Weighted |
|
||
Outstanding, January 1, 2024 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
$ |
|
||
Exercised |
|
|
( |
) |
|
$ |
|
|
Cancelled or forfeited |
|
|
( |
) |
|
$ |
|
|
Outstanding, September 30, 2024 |
|
|
|
|
$ |
|
||
The fair value of stock options, and the assumptions used in the Black Scholes option-pricing model to determine the grant date fair value of stock options granted to employees and non-employees were as follows, presented on a weighted average basis:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fair value of stock options |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Risk-free interest rate |
|
|
|
|
|
% |
|
|
% |
|
|
% |
||||
Expected terms (in years) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Expected volatility |
|
|
|
|
|
% |
|
|
% |
|
|
% |
||||
Expected dividend yield |
|
|
|
|
|
% |
|
|
% |
|
|
% |
||||
Restricted Share Units
The following table summarizes the Company’s restricted share unit activity:
|
|
Number of |
|
|
Weighted |
|
||
Outstanding, January 1, 2024 |
|
|
|
|
$ |
|
||
Awarded |
|
|
|
|
$ |
|
||
Vested and released |
|
|
( |
) |
|
$ |
|
|
Forfeited |
|
|
( |
) |
|
$ |
|
|
Outstanding, September 30, 2024 |
|
|
|
|
$ |
|
||
The fair value of each restricted share unit is estimated on the date of grant based on the fair value of our common shares on that same date.
Share-Based Compensation
Share-based compensation expense for all awards was allocated as follows:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Research and development |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total share-based compensation expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
14
Share-based compensation expense by type of award was as follows:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Stock options |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Restricted share units |
|
|
|
|
|
|
|
|
|
|
|
|
||||
ESPP |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Total share-based compensation expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
As of September 30, 2024, there was $
11. Net Loss per Share
The following table summarizes the computation of basic and diluted net loss per share attributable to common shareholders of the Company:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
(in thousands, except share and per share amounts) |
|
|||||||||||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average common shares outstanding — basic and |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss per share - basic and diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common shareholders for the periods indicated because including them would have had an anti-dilutive effect:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Options to purchase common shares |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Restricted share units |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Estimated shares issuable under the ESPP |
|
|
|
|
|
|
|
|
|
|
|
|
||||
12. Subsequent Event
Sales Agreement
On November 7, 2024, the Company entered into a Common Shares Sales Agreement, or the Sales Agreement, with TD Securities (USA) LLC, or TD Cowen, as sales agent, pursuant to which the Company may offer and sell, from time to time at prevailing market prices, common shares, or the ATM Shares. The ATM Shares to be sold under the Sales Agreement, if any, will be issued and sold pursuant to the Company's shelf registration statement on Form S-3 (File No. 333-281298), which was declared effective by the Securities and Exchange Commission, or SEC, on August 19, 2024, up to a maximum aggregate amount of $
15
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with (i) our unaudited condensed consolidated financial statements and related notes, appearing elsewhere in this Quarterly Report on Form 10-Q and (ii) the audited consolidated financial statements and related notes and management’s discussion and analysis of financial condition and results of operations for the fiscal year ended December 31, 2023 included in our Annual Report on Form 10-K (the “Annual Report”), filed with the Securities and Exchange Commission, (the “SEC”), on February 28, 2024. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business and related financing, contains forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” sections of this Quarterly Report on Form 10-Q and our Annual Report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
We are a leading clinical-stage precision oncology company enabled by our proprietary synthetic lethality approach to the discovery and development of novel therapeutics. Synthetic lethality (“SL”) represents a clinically validated approach to drug development. We use our proprietary, genome-wide, CRISPR-enabled SNIPRx platform to systematically discover and develop highly targeted cancer therapies that preferentially treat cancers due to mechanisms of genomic instability, including DNA damage repair. SL arises when a deficiency in either of two genes is tolerated in cells, but simultaneous deficiencies in both genes cause cell death. Cancer cells that contain a mutation in one gene of a SL pair are susceptible to therapeutic intervention targeting the other gene pair.
Our Pipeline
Using our SNIPRx platform, we have internally developed four clinical therapeutic candidates:
We presented positive initial Phase 1 data from our ongoing Phase 1 MYTHIC trial deamonstrating proof of concept for lunresertib alone and in combination with camonsertib at the AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics (ANE) in October 2023. Lunresertib was shown to be well tolerated, with a compelling safety profile. We further presented positive updated safety and tolerability data for the combination of camonsertib and lunresertib at the FDA-agreed recommended Phase 2 dose highlighting the benefits of an individualized schedule for the management of anemia at the ANE conference in October 2024. We also presented data at the American Association of Cancer Research’s (AACR) 15th Annual Ovarian Cancer Research Symposium in September 2024 demonstrating significant survival disparities, poor prognosis, and inherent chemotherapy resistance in patients harboring lunresertib- and
16
camonsertib-sensitizing biomarkers. In December 2024, we expect to provide updated MYTHIC data from ovarian and endometrial cancer expansion cohorts in approximately 20-30 patients each with the lunresertib and camonsertib combination, and expect to begin a registrational trial in 2025. In the third quarter of 2023, we received Fast Track designation for lunresertib in combination with camonsertib for the treatment of adult patients with CCNE1 amplified, or FBXW7 or PPP2R1A mutated endometrial cancer. In June 2024, we were granted Fast-Track designation by the FDA for lunresertib in combination with camonsertib for the treatment of adult patients with CCNE1 amplified, or FBXW7 or PPP2R1A-mutated platinum-resistant ovarian cancer. In preparation for a potential registrational clinical trial start in 2025, we formed a collaboration with Foundation Medicine, Inc. in September 2024 to provide prospective genomic profiling to patients in the ongoing MYTHIC study of lunresertib alone or in combinations in genomically-defined patient populations. We are additionally exploring opportunities with Foundation Medicine to develop FoundationOne®CDx, a tissue-based comprehensive genomic profiling test, as a companion diagnostic for the lunresertib program.
We initiated additional Phase 1 combination clinical trials of lunresertib with gemcitabine (MAGNETIC) in December 2021 and with FOLFIRI (MINOTAUR) in August 2022. In May 2024, we announced preliminary safety data for MINOTAUR demonstrating no significant incremental toxicities for the lunresertib and FOLFIRI combination over FOLFIRI alone and an early signal with favorable tolerability in colorectal and other gastrointestinal tumors. We announced positive initial data from the ongoing Phase 1 MINOTAUR clinical trial at the European Society of Medical Oncology (“ESMO”) Gastrointestinal (GI) Cancers Congress in June 2024. In the fourth quarter of 2022, we received Fast Track designation for lunresertib in combination with gemcitabine for the treatment of adult patients with CCNE1 amplified, or FBXW7, or PPP2R1A mutated platinum resistant ovarian cancer. We are collaborating with the Canadian Cancer Trials Group in an ongoing basket Phase 2 Investigator Sponsored Clinical Trial (“IST”) that is enrolling patients with selected, advanced cancers receiving lunresertib as combination (NCT05605509). A sub-study to that protocol is also ongoing that is evaluating lunresertib in combination with gemcitabine in patients with CDK4/6 inhibitor treated ER+/HER2- metastatic breast cancer (NCT05601440). We are also collaborating with University Health Network, Toronto on an investigator-sponsored Phase 1 clinical trial of lunresertib in combination with carboplatin and paclitaxel in TP53 ovarian and uterine cancer (NCT06107868) and such trial is currently enrolling patients.
In January 2024, we announced our collaboration with Debiopharm International S.A., a Swiss-based biopharmaceutical company. As part of this collaboration, we are sponsoring a global trial as a new arm in the ongoing MYTHIC trial combining lunresertib with Debio 0123, a highly selective, brain penetrant, clinical WEE1 inhibitor. We announced the first patient was dosed with the synergistic lunresertib and Debio 0123 combination in April 2024. This is the first clinical trial inhibiting both PKMYT1 and WEE1. We expect to report initial data from this MYTHIC arm in 2025.
In June 2022, we entered into a worldwide license and collaboration agreement, or the Roche Agreement, with Hoffmann-La Roche Inc. and F. Hoffmann-La Roche Ltd (or “Roche”) for the development and commercialization of camonsertib, which resulted in an initial $125 million upfront payment. In February 2024, we received a $40 million milestone payment from Roche upon dosing of the first patient with camonsertib in Roche’s TAPISTRY trial. Over the course of the Roche camonsertib collaboration, we received a cumulative total of $182.6 million, including the upfront payment, the milestone payment, as well as additional reimbursements from Roche. On February 7, 2024, we received written notice from Roche of their election to terminate the Roche camonsertib collaboration. The termination became effective in May 2024, at which time we regained global development and commercialization rights for camonsertib from Roche.
In May 2024, we announced an expansion of the TRESR clinical trial as a Phase 2 clinical trial evaluating camonsertib monotherapy in approximately 20 patients with ATM-mutated (“ATMm”) NSCLC, supported by early, promising camonsertib monotherapy signal in patients with ATMm NSCLC from the ongoing Phase 1/2 TRESR trial. We expect to report initial data from this expansion cohort TRESR trial in 2025. In September 2024, we presented Phase 1 data from a clinical trial conducted in collaboration with investigators at Memorial-Sloan Kettering Cancer Center that demonstrated camonsertib in combination with palliative radiation demonstrated higher clinical benefit in patients with metastatic tumors harboring pathogenic ATM mutations versus those with variants of unknown significance. We presented initial clinical data from the Phase 1/2 TRESR and ATTACC clinical trials evaluating camonsertib in combination with three poly (ADP-ribose) polymerase (PARP) inhibitors - talazoparib, niraparib, and olaparib. Camonsertib demonstrated 48% overall CBR in patients with advanced solid tumors across tumor types regardless of choice of PARP inhibitor or platinum resistance, with a favorable safety and tolerability profile.
17
We reported comprehensive preclinical data for RP-1664 in November 2023, including deep tumor growth inhibition and regressions in multiple TRIM37-high solid tumor or neuroblastoma xenograft models. The preclinical in vivo animal model evaluations were performed both internally and in collaboration with Children’s Hospital of Philadelphia. In February 2024, we dosed the first patient in the LIONS (PLK4 Inhibitor in Advanced Solid Tumors) clinical trial (NCT06232408), a multicenter, open-label Phase 1 clinical trial to investigate safety, pharmacokinetics, pharmacodynamics and the preliminary efficacy of RP-1664. After evaluating safety in adult patients with recurrent solid tumors in the LIONS clinical trial, we expect to move into a Phase 1/2 clinical trial in patients with high risk, recurrent pediatric neuroblastoma, where the patients have limited treatment options and a high prevalence of TRIM37-altered tumors.
Recent Developments
18
Liquidity Overview
Since our inception in September 2016, we have focused primarily on raising capital, organizing and staffing our company, conducting discovery and research activities, identifying potential SL gene pairs, establishing and protecting our intellectual property portfolio including for our proprietary SNIPRx platform, developing and progressing our product candidates through preclinical studies and preparing for clinical trials and establishing arrangements with third parties for the manufacture of initial quantities of our product candidates and component materials.
As of September 30, 2024, we had cash and cash equivalents and marketable securities on hand of $179.4 million. We believe that our cash, cash equivalents, and marketable securities will be sufficient to fund our anticipated operating and capital expenditure requirements into the second half of 2026. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our capital resources sooner than we expect.
Since inception, we have incurred significant operating losses. Our net losses were $93.8 million and $29.0 million for the years ended December 31, 2023 and 2022, respectively, and $56.0 million for the nine months ended September 30, 2024. As of September 30, 2024, we had an accumulated deficit of $389.1 million.
We expect to continue to incur significant and increasing expenses and operating losses for the foreseeable future as we advance our product candidates through preclinical and clinical development and seek regulatory approvals, manufacture drug product and drug supply, and maintain and expand our intellectual property portfolio. Our net losses are also expected to be impacted as we pay for accounting, audit, legal, regulatory and consulting services, and pay costs associated with maintaining compliance with Nasdaq listing rules and SEC requirements, directors and officers, or D&O, insurance, investor and public relations activities and other expenses associated with operating as a public company. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our preclinical studies, our clinical trials, our expenditures on other research and development activities, and our revenue and expenses recognized from collaboration and license agreements.
We do not have any products approved for sale. We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for our product candidates, if ever. As a result, we will need substantial
19
additional funding to support our continuing operations and pursue our growth strategy. Until we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity offerings and debt financings or other sources, such as potential collaboration agreements, strategic alliances and licensing arrangements. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on acceptable terms, or at all. Our failure to raise capital or enter into such agreements as, and when, needed, could have a negative effect on our business, results of operations and financial condition.
Macroeconomic Considerations
Unfavorable conditions in the economy in the United States, Canada and abroad may negatively affect the growth of our business and our results of operations. For example, macroeconomic events, including health pandemics, changes in inflation, interest rates and foreign currency exchange rates, banking crises or disruptions in access to bank deposits or lending commitments, natural disasters, geopolitical instability resulting from war, terrorism and other violence, as well as supply chain disruptions have led to economic uncertainty globally and could impact our overall business operations. The effect of macroeconomic conditions may not be fully reflected in our results of operations until future periods. If, however, economic uncertainty increases or the global economy worsens, our business, financial condition and results of operations may be harmed.
In addition, because some of our manufacturers and suppliers are located in China, we are exposed to the possibility of product supply disruption and increased costs in the event of changes in the policies, laws, rules and regulations of the United States or Chinese governments, as well as political unrest or unstable economic conditions in China. For example, trade tensions between the United States and China have been escalating in recent years. Most notably, several rounds of U.S. tariffs have been placed on Chinese goods being exported to the United States. Each of these U.S. tariff impositions against Chinese exports was followed by a round of retaliatory Chinese tariffs on U.S. exports to China. Our components may in the future be subject to these tariffs, which could increase our manufacturing costs and could make our products, if successfully developed and approved, less competitive than those of our competitors whose inputs are not subject to these tariffs. We may otherwise experience supply disruptions or delays, and although we carefully manage our supply and lead-times, our suppliers may not continue to provide us with clinical supply in our required quantities, to our required specifications and quality levels or at attractive prices. In addition, certain Chinese biotechnology companies and CMOs may become subject to trade restrictions, sanctions, other regulatory requirements, or proposed legislation by the U.S. government, which could restrict or even prohibit our ability to work with such entities, thereby potentially disrupting the supply of material to us. Such disruption could have adverse effects on the development of our product candidates and our business operations. In addition, the proposed BIOSECURE Act recently passed in the House of Representatives, as well as a substantially similar bill in the Senate, prohibit U.S. federal government contracts, loans and grants to entities that use biotechnology equipment or services from designated "biotechnology companies of concern," which currently include a number of Chinese biotechnology companies. The current House version of the BIOSECURE Act provides a grandfathering provision allowing biotechnology equipment and services provided or produced by a biotechnology company of concern under a contract or agreement entered into before the effective date until January 1, 2032. Depending on whether the BIOSECURE Act becomes law, what the final language of the BIOSECURE Act includes, and how the law is interpreted by U.S. federal agencies, companies could lose the ability to contract with, or otherwise receive funding from, the U.S. government if they contract with or continue to use designated biotechnology companies of concern beyond the grandfathering period.
For further discussion of the potential impacts of macroeconomic events on our business, financial condition, and operating results, see the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023.
Components of Results of Operations
Revenue
To date, we have not recognized any revenue from product sales, and we do not expect to generate any revenue from the sale of products in the foreseeable future. If our development efforts for our product candidates are successful and result in regulatory approval, or license agreements with third parties, we may generate revenue in the future from product sales. However, there can be no assurance as to when we will generate such revenue, if at all.
The following table presents revenue from our collaboration agreements:
20
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Roche Collaboration and License Agreement |
|
$ |
— |
|
|
$ |
1,659 |
|
|
$ |
50,888 |
|
|
$ |
11,796 |
|
Bristol-Myers Squibb Collaboration and License Agreement |
|
|
— |
|
|
|
500 |
|
|
|
2,589 |
|
|
|
15,817 |
|
Ono Collaboration Agreement |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10,473 |
|
Total revenue |
|
$ |
— |
|
|
$ |
2,159 |
|
|
$ |
53,477 |
|
|
$ |
38,086 |
|
Collaboration and License Agreement with Hoffmann-La Roche Inc. and F. Hoffmann-La Roche Ltd
On June 1, 2022, we entered into a collaboration and license agreement, or the Roche Agreement, with Roche regarding the development and commercialization of our product candidate camonsertib (also known as RP-3500) and specified other ATR inhibitors, which we refer to as the Licensed Products.
Under the Roche Agreement, we granted Roche a worldwide, perpetual, exclusive, sublicensable license to develop, manufacture, and commercialize the Licensed Products. Roche assumed all subsequent development of camonsertib with the potential to expand development into additional tumors and multiple combination studies. We agreed to complete specified ongoing clinical trials in accordance with the development plan in the Roche Agreement, as well as ongoing investigator sponsored trials, or together, the Continuing Trials, at our expense. We also retained the right to conduct specified clinical trials of camonsertib in combination with our PKMYT1 compound (also known as RP-6306).
In February 2024, we received a $40 million milestone payment from Roche that was earned upon dosing of the first patient with camonsertib in Roche’s Phase 2 TAPISTRY trial in January 2024.
In March 2024, we received a further payment of $4.0 million for revisions to the clinical development plan under the Roche Agreement, of which $2.1 million was previously recorded as a receivable on our balance sheet at December 31, 2023.
Deferred revenue pertaining to the Roche Agreement |
|
Completion of Continuing Trials |
|
|
|
|
(in thousands) |
|
|
Balance as of December 31, 2023 |
|
$ |
9,463 |
|
Increase in collaboration revenue |
|
|
41,425 |
|
Recognition as revenue, as the result of performance obligations satisfied |
|
|
(50,888 |
) |
Balance as of September 30, 2024 |
|
$ |
— |
|
We recognized nil and $1.7 million for the three months ended September 30, 2024 and 2023, respectively, and $50.9 million and $11.8 million for the nine months ended September 30, 2024 and 2023, respectively, as revenue associated with the Roche Agreement in relation to (i) the recognition of revenue from the $40.0 million milestone achievement in the first quarter of 2024, as well as (ii) the recognition of all remaining deferred revenue for research and development services performed towards the completion of the Continuing Trials during the period.
On February 7, 2024, we received written notice from Roche of their election to terminate the Roche Agreement following a review of Roche’s pipeline and evolving external factors. The termination became effective May 7, 2024, at which time we regained global development and commercialization rights for camonsertib from Roche.
Collaboration and License Agreement with Bristol-Myers Squibb Company
In May 2020, we entered into a collaboration and license agreement, or the BMS Agreement, with the Bristol-Myers Squibb Company, or Bristol-Myers Squibb, pursuant to which we and Bristol-Myers Squibb have agreed to collaborate in the research and development of potential new product candidates for the treatment of cancer. We provided Bristol-Myers Squibb access to a selected number of our existing screening campaigns and novel campaigns. We were responsible for carrying out early-stage research activities directed to identifying potential targets for potential licensing by Bristol-Myers Squibb. The collaboration consisted of programs directed to both druggable targets and to targets commonly considered undruggable to traditional small molecule approaches. In the event that Bristol-Myers Squibb elects to obtain an exclusive license for the subsequent development, manufacturing and commercialization of a program, Bristol-Myers Squibb will then be solely responsible for all such worldwide activities.
Although the collaboration term expired in November 2023, the BMS Agreement will not expire until, on a licensed product-by-licensed product and country-by-country basis, the expiration of the applicable royalty term and in its entirety upon expiration of the
21
last royalty term. Either party may terminate earlier upon an uncured material breach of the agreement by the other party, or the insolvency of the other party. Additionally, Bristol-Myers Squibb may terminate the BMS Agreement for any or no reason on a program-by-program basis upon specified written notice. We are eligible to receive up to $301.0 million in total milestones on a program-by-program basis, subject upon the achievement of certain specified research, development, regulatory and commercial milestones. We are further entitled to a tiered percentage royalty on annual net sales ranging from high-single digits to low-double digits, subject to certain specified reductions.
In March 2024, Bristol-Myers Squibb exercised its one remaining option for an undruggable target for a combined total of five druggable targets and one undruggable target over the course of the collaboration. As a result, we recognized the remaining deferred revenue of $2.6 million as revenue related to undruggable targets, including an option fee payment of $0.1 million.
Ono Collaboration Agreement
In January 2019, we entered into a research services, license and collaboration agreement, or the Ono Agreement, with Ono Pharmaceutical Company Ltd., or Ono, pursuant to which we and Ono agreed to collaborate in the research of potential product candidates targeting Polθ and the development of our small molecule Polθ inhibitor program. In June 2023, we and Ono determined not to further extend the Term of the Ono Agreement. As a result, no product candidate would be licensed to Ono pursuant to the terms of the Ono Agreement. We recognized approximately $10.5 million as revenue for the three and six months ended June 30, 2023 with regards to the performance obligation under the Ono Agreement. We did not recognize any revenue pursuant to the Ono Agreement during the three and nine months ended September 30, 2024.
Operating Expenses
Debiopharm Collaborative Arrangement
In January 2024, we entered into a clinical study and collaboration agreement, or the Debio Collaboration Agreement, with Debiopharm International S.A., or Debiopharm, a privately-owned, Swiss-based biopharmaceutical company, with the aim to explore the synergy between our compound, lunresertib, and Debiopharm’s compound, Debio 0123, a WEE1 inhibitor. We are collaborating with Debiopharm on the development of a combination therapy, with us sponsoring the global study, and will share all costs equally. Both parties are each supplying their respective drugs and retain all commercial rights to their respective compounds, including as monotherapy or as combination therapies. The activities associated with the Debio Collaboration Agreement are coordinated by a joint steering committee, which is comprised of an equal number of representatives from both parties.
Based on the terms of the Debio Collaboration Agreement, we concluded that the Debio Collaboration Agreement meets the requirements of a collaboration within the guidance of ASC 808, “Collaborative Arrangements”, as both parties are active participants in the combination trial and are exposed to significant risks and rewards depending on the success of the combination trial. Accordingly, the net costs associated with the co-development are expensed as incurred and recognized within research and development expenses in our consolidated statement of operations and comprehensive loss.
During the three and nine months ended September 30, 2024, we recognized $0.8 million and $2.1 million, respectively, in net research and development costs with regards to the Debiopharm portion of the 50/50 cost sharing terms in the Debio Collaboration Agreement, and recorded a receivable from Debiopharm of $0.3 million as of September 30, 2024 in “other current receivables”.
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for our research activities, including our drug discovery efforts and the development of our product candidates, partially offset by development cost reimbursements from collaborative arrangements and fully refundable Canadian research and development tax credits. We expense research and development costs as incurred, which include:
22
Costs for certain activities are recognized based on an evaluation of the progress to completion of specific tasks using data such as information provided to us by our vendors and analyzing the progress of our studies or other services performed. Significant judgment and estimates are made in determining the accrued expense or prepaid balances at the end of any reporting period.
We characterize research and development costs incurred prior to the identification of a product candidate as discovery costs. We characterize costs incurred once a product candidate has been identified as development costs.
Our direct external research and development expenses consist primarily of fees paid to outside consultants, CROs, CMOs and research laboratories in connection with our preclinical development, process development, manufacturing and clinical development activities. Our direct external research and development expenses also include fees incurred under license, acquisition, and option agreements. We track these external research and development costs on a program-by-program basis once we have identified a product candidate.
We do not allocate employee costs, costs associated with our discovery efforts, laboratory supplies, and facilities, including depreciation or other indirect costs, to specific programs because these costs are deployed across multiple programs and, as such, are not separately classified. We use internal resources primarily to conduct our research and discovery activities as well as for managing our preclinical development, process development, manufacturing, and clinical development activities.
The following table summarizes our research and development costs:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Discovery costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Direct external costs |
|
$ |
1,327 |
|
|
$ |
2,239 |
|
|
$ |
4,451 |
|
|
$ |
5,800 |
|
Laboratory supplies and research materials |
|
|
905 |
|
|
|
813 |
|
|
|
2,862 |
|
|
|
2,846 |
|
Personnel related costs |
|
|
2,412 |
|
|
|
2,705 |
|
|
|
8,830 |
|
|
|
8,968 |
|
Facilities related costs |
|
|
492 |
|
|
|
404 |
|
|
|
1,290 |
|
|
|
1,143 |
|
Other costs |
|
|
875 |
|
|
|
1,019 |
|
|
|
2,629 |
|
|
|
2,867 |
|
|
|
|
6,011 |
|
|
|
7,180 |
|
|
|
20,062 |
|
|
|
21,624 |
|
Development |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Direct external costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Camonsertib program* |
|
|
2,711 |
|
|
|
4,951 |
|
|
|
10,652 |
|
|
|
16,502 |
|
Lunresertib program* |
|
|
6,740 |
|
|
|
7,697 |
|
|
|
22,507 |
|
|
|
21,940 |
|
RP-1664 program |
|
|
2,603 |
|
|
|
1,551 |
|
|
|
5,611 |
|
|
|
4,851 |
|
RP-3467 and Polθ program |
|
|
1,554 |
|
|
|
1,534 |
|
|
|
3,882 |
|
|
|
4,558 |
|
Personnel related costs |
|
|
8,153 |
|
|
|
8,400 |
|
|
|
26,998 |
|
|
|
25,531 |
|
Facilities related costs |
|
|
225 |
|
|
|
225 |
|
|
|
646 |
|
|
|
642 |
|
Other costs* |
|
|
1,395 |
|
|
|
1,476 |
|
|
|
4,013 |
|
|
|
3,727 |
|
Debiopharm development cost reimbursement |
|
|
(753 |
) |
|
|
— |
|
|
|
(2,133 |
) |
|
|
— |
|
|
|
|
22,628 |
|
|
|
25,834 |
|
|
|
72,176 |
|
|
|
77,751 |
|
R&D tax credits |
|
|
(238 |
) |
|
|
(305 |
) |
|
|
(792 |
) |
|
|
(1,048 |
) |
Total research and development costs |
|
$ |
28,401 |
|
|
$ |
32,709 |
|
|
$ |
91,446 |
|
|
$ |
98,327 |
|
*Certain amounts have been reclassified for presentation purposes.
23
The successful development of our product candidates is highly uncertain. While in the short term we expect our research and development expenses to decrease as a result of the cost savings initiatives we implemented in connection with a strategic reprioritization in August 2024, we plan to substantially increase our research and development expenses in the longer term as we continue the development of our product candidates, including the potential registrational trial of lunresertib and camonsertib combination expected to commence in 2025. We cannot determine with certainty the timing of initiation, the duration, or the completion costs of current or future preclinical studies and clinical trials of our product candidates due to the inherently unpredictable nature of preclinical and clinical development. Clinical and preclinical development timelines, the probability of success and development costs can differ materially from expectations. We anticipate that we will make determinations as to which product candidates to pursue and how much funding to direct to each product candidate on an ongoing basis in response to the results of ongoing and future preclinical studies and clinical trials, regulatory developments, and our ongoing assessments as to each product candidate’s commercial potential. We will need to raise substantial additional capital in the future. Our clinical development costs are expected to increase significantly as we commence clinical trials. We anticipate that our expenses will increase substantially, particularly due to the numerous risks and uncertainties associated with developing product candidates, including the uncertainty of:
Any changes in the outcome of any of these variables with respect to the development of our product candidates in preclinical and clinical development could mean a significant change in the costs and timing associated with the development of these product candidates. We may never succeed in achieving regulatory approval for any of our product candidates. We may obtain unexpected results from our clinical trials. We may elect to discontinue, delay or modify clinical trials of some product candidates or focus on other product candidates. For example, if the FDA, the European Medicines Agency, (EMA), or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect or if we experience significant delays in enrollment in any of our ongoing and planned clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development of that product candidate.
General and Administrative Expenses
General and administrative expense consists primarily of employee related costs, including salaries, bonuses, benefits, share-based compensation and other related costs, as well as expenses for outside professional services, including legal, accounting and audit services and other consulting fees, rent expense, directors and officers insurance expenses, investor and public relations expenses and other general administrative expenses.
We anticipate that we will continue to incur significant accounting, audit, legal, regulatory, compliance and directors’ and officers’ insurance costs as well as investor and public relations expenses.
Restructuring Expenses
In August 2024, we announced a strategic reprioritization of our research and development activities to focus our efforts on the advancement of our portfolio of clinical-stage oncology programs. As part of this strategic refocus, we reduced our overall workforce by approximately 25%, with a majority of the headcount reductions from our preclinical group. For the three and nine months ended September 30, 2024, we incurred approximately $1.5 million in costs as part of this strategic refocus, comprised primarily of severance and termination benefits.
24
Other Income (Expense), Net
Other income (expense), net consists primarily of realized and unrealized gains and losses on foreign exchange, interest income earned on cash and cash equivalents and marketable securities, and other expenses such as interest and bank charges.
Realized and unrealized gains and losses on foreign exchange consist of realized and unrealized gains and losses from holding cash and foreign currency denominated other receivables, accounts payable, accrued expenses and other current liabilities as well as operating lease liabilities.
Results of Operations
Comparison of the Three Months Ended September 30, 2024 and 2023
The following table summarizes our results of operations for the three months ended September 30, 2024 and 2023:
|
|
Three Months Ended |
|
|
|
|
||||||
|
|
2024 |
|
|
2023 |
|
|
Change |
|
|||
|
|
(in thousands) |
|
|||||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|||
Collaboration agreements |
|
$ |
— |
|
|
$ |
2,159 |
|
|
$ |
(2,159 |
) |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Research and development, net of tax credits |
|
|
28,401 |
|
|
|
32,709 |
|
|
|
(4,308 |
) |
General and administrative |
|
|
6,444 |
|
|
|
7,868 |
|
|
|
(1,424 |
) |
Restructuring |
|
|
1,527 |
|
|
|
— |
|
|
|
1,527 |
|
Total operating expenses |
|
|
36,372 |
|
|
|
40,577 |
|
|
|
(4,205 |
) |
Loss from operations |
|
|
(36,372 |
) |
|
|
(38,418 |
) |
|
|
2,046 |
|
Other income (expense), net |
|
|
|
|
|
|
|
|
|
|||
Realized and unrealized loss on foreign exchange |
|
|
(19 |
) |
|
|
(40 |
) |
|
|
21 |
|
Interest income |
|
|
2,512 |
|
|
|
3,312 |
|
|
|
(800 |
) |
Other expense |
|
|
(42 |
) |
|
|
(32 |
) |
|
|
(10 |
) |
Total other income, net |
|
|
2,451 |
|
|
|
3,240 |
|
|
|
(789 |
) |
Loss before income taxes |
|
|
(33,921 |
) |
|
|
(35,178 |
) |
|
|
1,257 |
|
Income tax (expense) recovery |
|
|
(485 |
) |
|
|
16,299 |
|
|
|
(16,784 |
) |
Net loss |
|
$ |
(34,406 |
) |
|
$ |
(18,879 |
) |
|
$ |
(15,527 |
) |
Revenue
Revenue was nil for the three months ended September 30, 2024, compared to $2.2 million for the three months ended September 30, 2023. The decrease of $2.2 million was due to:
Research and Development Expenses, Net of Tax Credits
Research and development expenses were $28.4 million for the three months ended September 30, 2024, compared to $32.7 million for the three months ended September 30, 2023. The decrease of $4.3 million was due to:
25
General and Administrative Expenses
General and administrative expenses were $6.4 million for the three months ended September 30, 2024, compared to $7.9 million for the three months ended September 30, 2023. The decrease of $1.5 million in general and administrative expenses consisted of:
Restructuring Expenses
Restructuring expenses were $1.5 million and nil for the three months ended September 30, 2024 and 2023, respectively, as a result of costs incurred as part of our strategic refocus, comprised primarily of severance and termination benefits.
Other Income (Expense), Net
Other income, net was $2.5 million and $3.2 million for the three months ended September 30, 2024 and 2023, respectively. The decrease of $0.7 million was primarily attributable to a decrease in cash and cash equivalents and marketable securities.
Income Tax
Income tax expense was $0.5 million for the three months ended September 30, 2024, compared to income tax recovery of $16.3 million for the three months ended September 30, 2023. The decrease of $16.8 million in income tax recovery was primarily due to the issuance of IRC Section 174 guidance on September 8, 2023.
Comparison of the Nine Months Ended September 30, 2024 and 2023
The following table summarizes our results of operations for the nine months ended September 30, 2024 and 2023:
|
|
Nine Months Ended |
|
|
|
|
||||||
|
|
2024 |
|
|
2023 |
|
|
Change |
|
|||
|
|
(in thousands) |
|
|||||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|||
Collaboration agreements |
|
$ |
53,477 |
|
|
$ |
38,086 |
|
|
$ |
15,391 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Research and development, net of tax credits |
|
|
91,446 |
|
|
|
98,327 |
|
|
|
(6,881 |
) |
General and administrative |
|
|
23,379 |
|
|
|
25,116 |
|
|
|
(1,737 |
) |
Restructuring |
|
|
1,527 |
|
|
|
— |
|
|
|
1,527 |
|
Total operating expenses |
|
|
116,352 |
|
|
|
123,443 |
|
|
|
(7,091 |
) |
Loss from operations |
|
|
(62,875 |
) |
|
|
(85,357 |
) |
|
|
22,482 |
|
Other income (expense), net |
|
|
|
|
|
|
|
|
|
|||
Realized and unrealized gain (loss) on foreign exchange |
|
|
18 |
|
|
|
(137 |
) |
|
|
155 |
|
Interest income |
|
|
8,374 |
|
|
|
10,228 |
|
|
|
(1,854 |
) |
Other expense |
|
|
(95 |
) |
|
|
(73 |
) |
|
|
(22 |
) |
Total other income, net |
|
|
8,297 |
|
|
|
10,018 |
|
|
|
(1,721 |
) |
Loss before income taxes |
|
|
(54,578 |
) |
|
|
(75,339 |
) |
|
|
20,761 |
|
Income tax (expense) recovery |
|
|
(1,440 |
) |
|
|
9,573 |
|
|
|
(11,013 |
) |
Net loss |
|
$ |
(56,018 |
) |
|
$ |
(65,766 |
) |
|
$ |
9,748 |
|
Revenue
Revenue was $53.5 million for the nine months ended September 30, 2024, compared to $38.1 million for the nine months ended September 30, 2023. The increase of $15.4 million was due to:
26
Research and Development Expenses, Net of Tax Credits
Research and development expenses were $91.4 million for the nine months ended September 30, 2024, compared to $98.3 million for the nine months ended September 30, 2023. The decrease of $6.9 million was due to:
General and Administrative Expenses
General and administrative expenses were $23.4 million for the nine months ended September 30, 2024, compared to $25.1 million for the nine months ended September 30, 2023. The decrease of $1.7 million in general and administrative expenses consisted of:
Restructuring Expenses
Restructuring expenses were $1.5 million and nil for the nine months ended September 30, 2024 and 2023, respectively, as a result of costs incurred as part of our strategic refocus, comprised primarily of severance and termination benefits.
Other Income (Expense), Net
Other income, net was $8.3 million and $10.0 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease of $1.7 million was primarily attributable to a decrease in cash and cash equivalents and marketable securities.
Income Tax
Income tax expense was $1.4 million for the nine months ended September 30, 2024, compared to income tax recovery of $9.6 million for the nine months ended September 30, 2023. The decrease of $11.0 million in income tax recovery was primarily due to the issuance of IRC Section 174 guidance on September 8, 2023.
Liquidity and Capital Resources
Since our inception, we have not recognized any revenue from product sales and have incurred operating losses and negative cash flows from our operations. We have not yet commercialized any product and we do not expect to generate revenue from sales of any products for several years, if at all.
In June 2020, we completed our IPO whereby we raised $232.0 million, net of underwriting commissions and offering expenses. In November 2021, we completed a follow-on offering whereby we raised $94.3 million, net of underwriting commissions and offering expenses. Prior to our IPO, we had funded our operations primarily through equity financings, having raised an aggregate of approximately $135.2 million of gross proceeds from the sale of our preferred shares and $15.0 million of gross proceeds from the issuance of a warrant to acquire our common shares. We have also received initial upfront and additional payments of approximately $60.5 million in the aggregate from partnerships with Ono for our Polθ ATPase inhibitor program and Bristol-Myers Squibb for research
27
and development of potential new product candidates for the treatment of cancer. In June 2022, we entered into a collaboration and license agreement with Roche for camonsertib and received a total of $182.6 million under the terms of the Roche Agreement, including an upfront payment of $125.0 million, a milestone payment of $40 million and additional reimbursements from Roche.
In November 2024, we entered into a Common Shares Sale Agreement, or the Sales Agreement, with TD Securities (USA) LLC, or TD Cowen. Under the Sales Agreement, pursuant to which we may offer and sell, from time to time at prevailing market prices, common shares, or the ATM Shares,. The ATM Shares to be sold under the Sales Agreement, if any, will be issued and sold pursuant to our shelf registration statement on Form S-3 (File No. 333-281298), which was declared effective by the Securities and Exchange Commission, or SEC, on August 19, 2024, up to a maximum aggregate amount of $100.0 million. We will file a prospectus supplement with the SEC on November 7, 2024 in connection with the offer and sale of the ATM Shares pursuant to the Sales Agreement. In connection with the Sales Agreement, we and TD Cowen terminated our prior sales agreement dated August 4, 2022. No shares were issued under this prior sales agreement.
In August 2024, we announced a strategic reprioritization of our research and development activities to focus our efforts on the advancement of our portfolio of clinical-stage oncology programs. As part of this strategic refocus, we reduced our overall workforce by approximately 25%, with a majority of the headcount reductions from our preclinical group. We incurred approximately $1.5 million in costs as part of this strategic refocus, comprised primarily of severance and termination benefits.
We expect to incur significant expenses and operating losses for the foreseeable future as we advance our product candidates through preclinical and clinical development, seek regulatory approval and pursue commercialization of any approved product candidates and we will continue to incur additional costs associated with operating as a public company. We expect that our research and development and general and administrative costs will increase in connection with our planned research and development activities.
Beginning in 2022, the Tax Cuts and Jobs Act of 2017 eliminated the option to deduct certain U.S.-based research and development expenditures in the current fiscal year and required taxpayers to amortize them over five years pursuant to Section 174 of the Internal Revenue Code of 1986, as amended, or the IRC. This provision increased our 2023 and 2022 cash payments of income taxes significantly as compared to 2021 in compliance with IRC Section 174. In September 2023, new interim guidance was issued by the Department of Treasury and the Internal Revenue Service on IRC Section 174 that supports the deduction of such expenses. An income tax receivable in the amount of $11.6 million as of September 30, 2024 reflects the overpayment of tax installments by our U.S. subsidiary (net of a $4.8 million refund received in October 2023). Any changes to tax legislation may materially affect our cash flows. Changes in our tax provisions or an increase in our tax liabilities, whether due to changes in applicable laws and regulations or our interpretation or application thereof, could have a material adverse effect on our financial position, results of operations and/or cash flows.
As of September 30, 2024, our cash and cash equivalents and marketable securities on hand was $179.4 million. We believe that our existing cash and cash equivalents and marketable securities on hand will be sufficient to fund our anticipated operating and capital expenditure requirements into the second half of 2026. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our capital resources sooner than we expect.
Because of the numerous risks and uncertainties associated with research, development, and commercialization of our product candidates, we are unable to estimate the exact amount of our working capital requirements. Our future capital requirements will depend on many factors, including:
28
Until such time, if ever, as we can generate substantial product revenues to support our cost structure, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations and other similar arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our shareholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common shareholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, or other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common shares. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.
Cash Flows
Comparison of the Nine Months Ended September 30, 2024 and 2023
The following table summarizes our cash flows for each of the periods presented:
|
|
Nine Months Ended |
|
|
|
|
||||||
|
|
2024 |
|
|
2023 |
|
|
Change |
|
|||
|
|
(in thousands) |
|
|||||||||
Net cash used in operating activities |
|
$ |
(49,121 |
) |
|
$ |
(99,002 |
) |
|
$ |
49,881 |
|
Net cash provided by investing activities |
|
|
17,882 |
|
|
|
46,162 |
|
|
|
(28,280 |
) |
Net cash provided by financing activities |
|
|
541 |
|
|
|
737 |
|
|
|
(196 |
) |
Effect of exchange rate fluctuations on cash held |
|
|
(29 |
) |
|
|
(49 |
) |
|
|
20 |
|
Net Decrease In Cash And Cash Equivalents |
|
$ |
(30,727 |
) |
|
$ |
(52,152 |
) |
|
$ |
21,425 |
|
Operating Activities
Net cash used in operating activities was $49.1 million for the nine months ended September 30, 2024, reflecting a net loss of $56.0 million, a net change of $10.3 million in our net operating assets, offset by non-cash charges of $17.2 million. The non-cash charges primarily consist of share-based compensation for option and restricted share unit grants to employees, as well as depreciation expense, and non-cash lease expense offset by the net accretion of marketable securities. The change in our net operating assets was due to decreases of $12.0 million in deferred revenue and $1.7 million in total operating lease liability, as well as increases of $2.0 million in prepaid expenses, with the payment of D&O insurance during the quarter, offset by increases of $2.4 million in accounts payable and accrued expenses and $1.5 million in income taxes payable and a decrease of $1.5 million in other current receivables and other non-current assets.
29
Net cash used in operating activities was $99.0 million for the nine months ended September 30, 2023, reflecting a net loss of $65.8 million and a net change of $49.2 million in our net operating assets, offset by non-cash charges of $16.0 million. The non-cash charges primarily consist of share-based compensation for option and restricted share unit grants to employees, as well as depreciation expense, and non-cash lease expense, offset by the net accretion of marketable securities. The change in our net operating assets was primarily due to a decrease of $32.8 million in deferred revenue recognized, a $19.3 million tax recovery and a $1.6 million decrease in operating lease liability, offset by an increase of $4.6 million in accounts payable.
The $49.9 million increase in cash provided by operating activities for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 is primarily due to the $40.0 million milestone payment from Roche in the first quarter of 2024.
Investing Activities
Net cash provided by investing activities was $17.9 million for the nine months ended September 30, 2024 and resulted primarily from proceeds on maturities of marketable securities offset by the purchases of marketable securities.
Net cash provided by investing activities was $46.2 million for the nine months ended September 30, 2023 and resulted primarily from proceeds on maturities of marketable securities offset by the purchases of marketable securities and property and equipment.
Financing Activities
Net cash provided by financing activities was $0.5 million and $0.7 million for the nine months ended September 30, 2024 and 2023, respectively, consisting primarily of net proceeds from the issuance of common shares under the ESPP.
Material Cash Requirements
In August 2024, the Company entered into a lease renewal agreement for office space in Cambridge, Massachusetts, for a twelve-month term ending in January 2026, which will result in additional minimum lease payments of $1.1 million over the twelve-month extended lease term.
Other than the changes in our lease commitments described above, there were no material changes to our material cash requirements during the nine months ended September 30, 2024 from those described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Annual Report.
Critical Accounting Estimates
This management’s discussion and analysis is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these unaudited condensed consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of expenses during the reported periods. We base our estimates on historical experience, known trends and events, and various other factors that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts, and experience. The effects of material revisions in estimates, if any, will be reflected in the consolidated financial statements prospectively from the date of change in estimates.
There have been no significant changes to our critical accounting estimates from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Annual Report.
Recently Issued Accounting Pronouncements
See Note 2 to our unaudited condensed consolidated financial statements included in this Quarterly Report for a description of recent issued accounting pronouncements not yet adopted.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to certain risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position to adverse changes in financial market prices and rates. Our market risk exposure is primarily related to fluctuations in interest rates and foreign currency exchange rates.
30
Interest Rate Risk
Interest-earning instruments carry a degree of interest rate risk. In the nine months ended September 30, 2024, we earned $8.4 million in interest income from cash balances held in cash and cash equivalents and marketable securities. As of September 30, 2024, we have a balance of $179.4 million in cash, money market funds, commercial paper and corporate debt securities. Our investment policy limits investment instruments to investment-grade securities with the objective to preserve capital and to maintain liquidity until the funds can be used in business operations. We do not have in place any tools to manage our interest rate risk. The risk of a sudden, significant change in market interest rates relative to the interest rates earned on our bank accounts and marketable securities having an impact on our results of operations or cash flows is limited owing to the relative short-term nature of these investments.
Foreign Currency Exchange Risk
Our reporting and functional currency is the U.S. dollar. Assets and liabilities denominated in currencies other than the U.S. dollar are translated into U.S. dollar at exchange rates in effect at each balance sheet date. Income items and expenses are translated using average exchange rate in effect for the relevant period.
We incur a portion of our expenses in Canadian dollars, as well as other currencies to a lesser extent. A change in the relative value of the U.S. dollar to the Canadian dollar and other currencies may negatively affect our results of operations, financial position or cash flows. We have not engaged in the hedging of foreign currency transactions to date, although we may choose to do so in the future. We do, however, keep expected Canadian dollar cash requirements in Canadian dollars to form a natural hedge. We are exposed to currency risk through our cash, other current receivables, accounts payable, accrued expenses and other current liabilities, and operating lease liabilities denominated in Canadian dollars. Based on our Canadian dollar net exposure as of September 30, 2024, and assuming all other variables remain constant, a 10% depreciation in the relative value of the U.S. dollar to the Canadian dollar would result in a decrease of approximately $0.1 million in our net loss.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2024. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures are effective.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving the desired control objectives. Our management recognizes that any control system, no matter how well designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurance that its objectives will be met. Similarly, an evaluation of controls cannot provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. We are not currently a party to any material legal proceedings, and we are not aware of any pending or threatened legal proceeding against us that we believe could have an adverse effect on our business, operating results or financial condition.
Item 1A. Risk Factors.
Investing in our common shares involves a high degree of risk. In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risks described in the Annual Report, including the disclosure therein under Part I, Item 1A, "Risk Factors,” before deciding whether to invest in our common shares. These are not the only risks facing our business. Other risks and uncertainties that we are not currently aware of or that we currently consider immaterial also may materially adversely affect our business, financial condition and future results. Risks we have identified but currently consider immaterial could still also materially adversely affect our business, financial condition and future results of operations if our assumptions about those risks are incorrect or if circumstances change.
There were no material changes during the period covered in this Quarterly Report to the risk factors previously disclosed in Part I, Item 1A of the Annual Report, except as follows:
We are a “smaller reporting company” and we cannot be certain if the reduced reporting requirements applicable to smaller reporting companies will make our common shares less attractive to investors.
Because the market value of our common shares held by non-affiliates was less than $200 million as of June 30, 2024, we qualify as a “smaller reporting company” under the Exchange Act as of June 30, 2024. We may continue to be a smaller reporting company if either (i) the market value of our common shares held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our common shares held by non-affiliates is less than $700 million. As a smaller reporting company, we may rely on exemptions from certain disclosure requirements that are available to smaller reporting companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. For so long as we remain a smaller reporting company, we are permitted and intend to rely on such exemptions from certain disclosure and other requirements that are applicable to other public companies that are not smaller reporting companies.
We cannot predict if investors will find our common shares less attractive because we may rely on the exemptions and reduced disclosure obligations applicable to smaller reporting companies. If some investors find our common shares less attractive as a result, there may be a less active trading market for our common shares and our share price may be more volatile.
If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, shareholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our common shares.
We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, as amended and the rules and regulations of The Nasdaq Global Market. Pursuant to Section 404 of the Sarbanes-Oxley Act, we are now required to perform system and process evaluation and testing of our internal control over financial reporting to allow our management to report on the effectiveness of our internal control over financial reporting. Furthermore, at such time we no longer qualify as a "smaller reporting company", our independent registered public accounting firm will be required to issue an annual report that attests the effectiveness of our internal control over financial reporting.
During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective. Further, we may in the future discover weaknesses in our system of internal financial and accounting controls and procedures that could result in a material misstatement of our financial statements. Moreover, our internal controls over financial reporting will not prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.
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If we are unable to assert that our internal control over financial reporting is effective, investors could lose confidence in the reliability of our financial statements, the market price of our common shares could decline and we could be subject to sanctions or investigations by The Nasdaq Global Market, the SEC or other regulatory authorities.
Our strategic reprioritization and the associated workforce reduction announced in August 2024 may not result in anticipated cost savings, could result in total costs and expenses that are greater than expected and could disrupt our business.
In August 2024, along with our strategic reprioritization, we announced a reduction in workforce by approximately 25% in connection with the strategic reprioritization of our research and development activities to focus our efforts on the advancement of our portfolio of clinical-stage oncology programs. The reduction in force was a component of our broader efforts to materially reduce our research and development expenses by streamlining our operations to focus on the advancement of our lunresertib, camonsertib, RP-1664 and RP-3467 programs while materially reducing the scale of our preclinical research and discovery activities. We may not realize, in full or in part, the anticipated benefits, savings and improvements in our operating structure from our restructuring and reprioritization efforts. If we are unable to realize the expected operational efficiencies and cost savings, our results of operation and financial condition would be adversely affected. We cannot guarantee that we will not have to undertake additional workforce reductions or restructuring activities in the future. Furthermore, our strategic restructuring plan may be disruptive to our operations. For example, our workforce reductions could yield unanticipated consequences, such as attrition beyond planned staff reductions, increased difficulties in our day-to-day operations and reduced employee morale. If employees who were not affected by the reduction in force seek alternate employment, this could result in us seeking contract support at unplanned additional expense or harm our productivity. Our workforce reductions could also harm our ability to attract and retain qualified management, scientific, clinical, and manufacturing personnel who are critical to our business. Any failure to attract or retain qualified personnel could prevent us from successfully developing lunresertib, camonsertib, RP-1664, RP-3467 and other product candidates in the future.
Enacted and future healthcare legislation may increase the difficulty and cost for us to progress our clinical programs and obtain marketing approval of and commercialize our product candidates and may affect the prices we may set.
In the United States and other jurisdictions, there have been, and we expect there will continue to be, a number of legislative and regulatory changes and proposed changes to the healthcare system that could affect our future results of operations. For example, in March 2010, the Patient Protection and Affordable Care Act (ACA) was enacted, which substantially changed the way healthcare is financed by both governmental and private insurers. The ACA, among other things, increased the minimum level of Medicaid rebates payable by manufacturers of brand name drugs; required collection of rebates for drugs paid by Medicaid managed care organizations; required manufacturers to participate in a coverage gap discount program, under which they must agree to offer point-of-sale discounts (increased to 70 percent, effective as of January 1, 2019) off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D; imposed a non-deductible annual fee on pharmaceutical manufacturers or importers who sell certain “branded prescription drugs” to specified federal government programs, implemented a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted, or injected expanded the types of entities eligible for the 340B drug discount program; expanded eligibility criteria for Medicaid programs; created a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; and established a Center for Medicare Innovation at CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.
There have been judicial, Congressional and executive branch challenges to certain aspects of the ACA. For example, on June 17, 2021, the U.S. Supreme Court dismissed a challenge on procedural grounds that argued the ACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress. Moreover, prior to the U.S. Supreme Court ruling, on January 28, 2021, President Biden issued an executive order that initiated a special enrollment period for purposes of obtaining health insurance coverage through the ACA marketplace. The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA. Further, on August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (IRA) into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplaces through plan year 2025. The IRA also eliminates the “donut-hole” under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost and through a newly established manufacturer discount program. It is possible that the ACA will be subject to judicial or Congressional challenges in the future. It is also unclear how any such challenges and other litigation, and further healthcare reform measures of the Biden administration will impact the ACA and our business.
In addition, other legislative changes have been proposed and adopted in the United States since the ACA was enacted. In August 2011, the Budget Control Act of 2011, among other things, led to aggregate reductions of Medicare payments to providers of 2% per fiscal year. These reductions went into effect in April 2013 and, due to subsequent legislative amendments to the statute will remain in
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effect until 2032 unless additional action is taken by Congress. On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminates the statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, beginning January 1, 2024. In January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several types of providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These new laws or any other similar laws introduced in the future may result in additional reductions in Medicare and other health care funding, which could negatively affect our customers and accordingly, our financial operations.
Moreover, payment methodologies may be subject to changes in healthcare legislation and regulatory initiatives. For example, CMS may develop new payment and delivery models, such as bundled payment models. In addition, recently there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several U.S. Congressional inquiries and proposed and enacted federal legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, and review the relationship between pricing and manufacturer patient programs. For example, in July 2021, the Biden administration released an executive order, “Promoting Competition in the American Economy,” with multiple provisions aimed at prescription drugs. In response to Biden’s executive order, on September 9, 2021, the U.S. Department of Health and Human Services (HHS) released a Comprehensive Plan for Addressing High Drug Prices that outlines principles for drug pricing reform and sets out a variety of potential legislative policies that Congress could pursue as well as potential administrative actions HHS can take to advance these principles. In addition, the IRA, among other things, (1) directs HHS to negotiate the price of certain single source drugs and biologics covered under Medicare and (2) imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation. The IRA permits HHS to implement many of these provisions through guidance, as opposed to regulation, for the initial years. HHS has and will continue to issue and update guidance as these programs are implemented. These provisions began to take effect progressively starting in fiscal year 2023. On August 15, 2024, HHS announced the agreed-upon reimbursement price for the first ten drugs that were subject to price negotiations, although the Medicare drug price negotiation program is currently subject to legal challenges. HHS will select up to fifteen additional drugs covered under Part D for negotiation in 2025. Further, in response to the Biden administration's October 2022 executive order, on February 14, 2023, HHS released a report outlining three new models for testing by the CMS Innovation Center which will be evaluated on their ability to lower the cost of drugs, promote accessibility, and improve quality of care. Further, on December 7, 2023, the Biden administration announced an initiative to control the price of prescription drugs through the use of march-in rights under the Bayh-Dole Act. On December 8, 2023, the National Institute of Standards and Technology published for comment a Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights which for the first time includes the price of a product as one factor an agency can use when deciding to exercise march-in rights. While march-in rights have not previously been exercised, it is uncertain if that will continue under the new framework. It is unclear whether the models will be utilized in any health reform measures in the future. We expect additional U.S. federal healthcare reform measures will be adopted in the future, particularly in light of the upcoming U.S. Presidential and Congressional elections, any of which could limit the amounts that the U.S. federal government will pay for healthcare products and services, which could result in reduced demand for our product candidates or additional pricing pressures.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
(a) Recent Sales of Unregistered Securities
None.
(b) Issuer Purchases of Equity Securities
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
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Item 5. Other Information.
Trading Arrangements
During the three months ended September 30, 2024, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act)
Sales Agreement
On November 7, 2024, we entered into a Common Shares Sales Agreement, or the Sales Agreement, with TD Securities (USA) LLC, or TD Cowen, as sales agent, pursuant to which we may issue and sell, from time to time, common shares, or the ATM Shares. The ATM Shares to be sold under the Sales Agreement, if any, will be issued and sold pursuant to our shelf registration statement on Form S-3 (File No. 333-281298), which was declared effective by the SEC on August 19, 2024, up to a maximum aggregate amount of $100.0 million. We will file a prospectus supplement with the SEC on November 7, 2024 in connection with the offer and sale of the ATM Shares pursuant to the Sales Agreement.
We are not obligated to sell any ATM Shares under the Sales Agreement. Subject to the terms and conditions of the Sales Agreement, TD Cowen will use commercially reasonable efforts, consistent with its normal trading and sales practices and applicable laws and regulations to sell ATM Shares from time to time based upon our instructions, including any price, time or size limits specified by us, subject to certain limitations. Under the Sales Agreement, TD Cowen may sell ATM Shares by any method permitted by law deemed to be an "at the market offering" as defined in Rule 415(a)(4) under the Securities Act, including block transactions, sales made directly on the Nasdaq Global Market or sales made into any other existing trading market of our common shares.
We will pay TD Cowen a commission of up to 3.0% of the gross proceeds from each sale of ATM Shares, reimburse legal fees and disbursements and provide TD Cowen with customary indemnification and contribution rights. The Sales Agreement will terminate as set forth in the Sales Agreement. The foregoing description of the Sales Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Sales Agreement, a copy of which is filed as Exhibit 10.2 to this Quarterly Report on Form 10-Q and incorporated herein by reference. In connection with the Sales Agreement, we and TD Cower terminated our prior Common Shares Sales Agreement dated August 4, 2022.
Stikeman Elliott LLP, our Canadian counsel, has issued a legal opinion relating to the validity of the ATM Shares being offered pursuant to the Sales Agreement. A copy of such legal opinion, including the consent included therein, is filed as Exhibit 5.1 to this Quarterly Report on Form 10-Q and is incorporated herein by reference.
This Quarterly Report on Form 10-Q shall not constitute an offer to sell or the solicitation of an offer to buy any ATM Shares under the Sales Agreement nor shall there be any sale of such ATM Shares in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.
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Item 6. Exhibits.
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Incorporated by Reference |
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8-K |
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001-39335 |
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3.1 |
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June 23, 2020 |
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8-K |
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001-39335 |
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3.2 |
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June 23, 2020 |
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5.1* |
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10.1* |
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10.2* |
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31.1* |
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31.2* |
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32.1** |
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101.INS* |
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Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document |
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101.SCH* |
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Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
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104 |
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Inline Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
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* Filed herewith.
** This certification is being furnished solely to accompany this Quarterly Report on Form 10-Q pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing of the registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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REPARE THERAPEUTICS INC. |
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Date: November 7, 2024 |
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By: |
/s/ Lloyd M. Segal |
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Lloyd M. Segal |
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President and Chief Executive Officer (Principal Executive Officer) |
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Date: November 7, 2024 |
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By: |
/s/ Steve Forte |
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Steve Forte |
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Executive Vice President, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
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Exhibit 5.1
November 7, 2024
Repare Therapeutics Inc.
7171 Frederick-Banting Street, Building 2, Suite 270
Saint-Laurent, Québec
H4S 1Z9
Dear Sirs/Mesdames:
Re: Repare Therapeutics Inc. – Prospectus Supplement to Registration Statement on Form S-3
We have acted as Canadian counsel to Repare Therapeutics Inc. (the “Corporation”), a corporation governed by the Business Corporations Act (Québec), in connection with the preparation of a prospectus supplement dated November 7, 2024 (the “Prospectus Supplement”) to the Corporation’s base prospectus dated August 6, 2024 (together with the Prospectus Supplement, the “Prospectus”) relating to the sale by the Corporation of common shares of the Corporation (the “Shares”) having an aggregate offering price of up to US$100,000,000 pursuant to the Sales Agreement (the “Sales Agreement”) entered into between the Corporation and TD Securities (USA), LLC, as agent thereunder. The Prospectus forms a part of the Corporation’s registration statement on Form S-3 (No. 333-281298) (as amended, the “Registration Statement”) filed with the Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “Securities Act”), which was declared effective under the Securities Act by the SEC on August 19, 2024.
We have examined the Registration Statement, the Prospectus and the Sales Agreement and all such corporate and public records, statutes and regulations and have made such investigations and have reviewed such other documents as we have deemed relevant and necessary and have considered such questions of law as we have considered relevant and necessary in order to give the opinion hereinafter set forth. As to various questions of fact material to such opinions which were not independently established, we have relied upon a certificate of an officer of the Corporation.
In reviewing the foregoing documents and in giving this opinion, we have assumed (a) the legal capacity of all individuals, the genuineness of all signatures, the veracity of the information contained therein, the authenticity of all documents submitted to us as originals and the conformity to authentic or original documents of all documents submitted to us as certified, conformed, electronic, photostatic or facsimile copies and (b) the completeness, truth and accuracy of all facts set forth in the official public records, certificates and documents supplied by public officials or otherwise conveyed to us by public officials.
We are qualified to practice law in the Province of Québec and this opinion is rendered solely with respect to the Province of Québec and the federal laws of Canada applicable in the Province of Québec. This opinion is expressed with respect to the laws in effect on the date of this opinion and we do not accept any responsibility to take into account or inform the addressee, or any other person authorized to rely on this opinion, of any changes in law, facts or other developments subsequent to this date that do or may affect the opinion we express.
Where our opinion expressed herein refers to the Shares having been issued as being “fully-paid and non-assessable” common shares of the Corporation, such opinion assumes that all required consideration (in whatever form) has been paid or provided. No opinion is expressed as to the adequacy of any consideration received.
On the basis of the foregoing, we are of the opinion that, when the Shares will have been issued and sold pursuant to the terms of the Sales Agreement, the Shares will be validly issued, fully paid and non-assessable.
We consent to the reference to our firm under the caption “Legal Matters” in the Prospectus and to the filing of this opinion as an exhibit to the Corporation’s Quarterly Report on Form 10-Q to be filed with the SEC for incorporation by reference into the Registration Statement.
Yours very truly, |
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/s/ Stikeman Elliott LLP |
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Stikeman Elliott LLP |
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Exhibit 10.1
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE (this “First Amendment”) dated as of August 26, 2024 (the “Effective Date”), between RREEF AMERICA REIT II CORP. PPP, a Maryland corporation (“Landlord”), and REPARE THERAPEUTICS USA, INC., a Delaware corporation (“Tenant”), related to certain premises located in the building in Riverfront Office Park, Cambridge, Massachusetts at 101 Main Street (the “101 Main Building” and, collectively with the additional building located in the Riverfront Office Park at One Main Street, the “Building”).
RECITALS:
A. Landlord and Tenant entered into that certain Lease dated July 13, 2021, as affected by that certain Commencement Date Memorandum dated as of February 25, 2022 (collectively, the “Lease”), for premises consisting of approximately 11,312 rentable square feet on the 16th floor of the 101 Main Building and commonly referred to as Suite 1650 (the “Premises”).
B. Landlord and Tenant desire to amend the Lease to (i) extend the Term with respect to the Premises, and (ii) amend certain other terms of the Lease, all as set forth herein.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing recitals and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree as follows:
1. Incorporation of Recitals; Capitalized Terms. The foregoing recitals are deemed to be true and accurate in all respects and are hereby incorporated into and made an integral part of this First Amendment. Capitalized terms used in this First Amendment shall have the same meanings ascribed to them in the Lease, unless otherwise expressly defined in this First Amendment. From and after the date hereof, the term “Lease,” as used in the Lease, shall mean the Lease, as amended by this First Amendment.
2. Extension of Term.
(a) The Term of the Lease is currently scheduled to expire on January 31, 2025 and the Term of the Lease is hereby extended for an additional term (the “Extended Term”) of one (1) year commencing on February 1, 2025 (the “Extended Term Commencement Date”) and expiring on January 31, 2026 (the “Extended Termination Date”), unless earlier terminated as set forth in the Lease. The Extended Term shall be upon all of the terms and conditions of the Lease, except as otherwise expressly modified or amended in this First Amendment. As of the Effective Date, “Lease Term” or “Term of this Lease,” as used in the Lease, shall be deemed to refer to the Term of the Lease as herein extended for the Extended Term and all references to the “Termination Date” shall be deemed to mean the Extended Termination Date.
(b) Tenant is in possession of the Premises, and Tenant acknowledges that Landlord shall have no obligation to perform any construction or make any additional improvements or alterations (including any Tenant Improvements), or to afford any allowance to Tenant (including any TI Allowance specified in the Lease) for improvements or alterations to prepare or improve the same for Tenant’s use during the Extended Term. Notwithstanding the foregoing, Landlord shall repair Tenant’s existing kitchen electrical issues at Landlord’s sole cost and expense, which cost is currently estimated to be $2,500.00.
3. Annual Rent Schedule. During the Extended Term, Tenant shall pay the Annual Rent with respect to the Premises to Landlord in the manner and in accordance with the terms and conditions of the Lease, in the amounts set forth below:
Period |
Rentable Square Footage |
Annual Rent per Square Foot |
Annual Rent |
Monthly Installment of Rent |
February 1, 2025 through January 31, 2026 |
11,312 |
$93.00 |
$1,052,016.00 |
$87,668.00 |
Annual Rent amounts set forth above are net of electricity charges and additional rent payable pursuant to the Lease.
4. Rent Adjustments. During the Extended Term, Tenant shall continue to pay all additional rent and electricity charges for the Premises accruing under the terms of the Lease, except that for purposes of calculating the additional rent payable under Article 4 of the Lease, during the Extended Term, the Base Year (Expenses) shall be calendar year 2024, and the Base Year (Taxes) shall be Taxes for tax fiscal 2024 (i.e., July 1, 2023 through June 30, 2024).
5. Security Deposit. Landlord is currently holding a cash security deposit in theamount of $268,264.00, which is to be held for the Extended Term subject to and in accordance with the applicable terms of the Lease.
6. Extension Option; Offer Space Option. Tenant’s Extension Option under Article 41 of the Lease shall remain in full force or effect through the Extended Term. Article 42 of the Lease is null and void and of no further force or effect.
7. Broker Indemnity. Landlord and Tenant each represent and warrant to the other that neither of them has employed or dealt with any broker, agent or finder in carrying on the negotiations relating to this First Amendment other than JLL and Newmark (the "Brokers"). Tenant shall indemnify and hold Landlord harmless from and against any claim or claims for brokerage or other commissions relating to this First Amendment asserted by any broker, agent or finder engaged by Tenant or with whom Tenant has dealt other than the Brokers. Landlord shall indemnify and hold Tenant harmless from and against any claim or claims for brokerage or other commissions relating to this First Amendment asserted by any broker, agent or finder engaged by Landlord or with whom Landlord has dealt other than the Brokers. Landlord shall be responsible to pay the commissions due to the Brokers pursuant to a separate written agreement between Landlord and the Brokers.
8. Tenant’s and Landlord’s Authority. Each of the persons executing this First Amendment on behalf of Tenant represents and warrants that Tenant has been and is qualified to do business in the state in which the Building is located, that the Tenant has full right and authority to enter into this First Amendment, and that all persons signing on behalf of the Tenant were authorized to do so by appropriate actions. Each of the persons executing this First Amendment on behalf of Landlord represents and warrants that Landlord has been and is qualified to do business in the state in which the Building is located, that Landlord has full right and authority to enter into this First Amendment, and that all persons signing on behalf of Landlord were authorized to do so by appropriate actions.
Tenant hereby represents and warrants that neither Tenant, nor any persons or entities holding any legal or beneficial interest whatsoever in Tenant, are (i) the target of any sanctions program that is established by Executive Order of the President or published by the Office of Foreign Assets Control, U.S. Department of the Treasury (“OFAC”); (ii) designated by the President or OFAC pursuant to the Trading with the Enemy Act, 50 U.S.C. App. § 5, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701-06, the Patriot Act, Public Law 107-56, Executive Order 13224 (September 23, 2001) or any Executive Order of the President issued pursuant to such statutes; or (iii) named on the following list that is published by OFAC: “List of Specially Designated Nationals and Blocked Persons.” If the foregoing representation is untrue at any time during the Term, a default that is subject to Section 18.1.2 of the Lease will be deemed to have occurred.
9. Incorporation. Except as modified herein, all other terms and conditions of the Lease shall continue in full force and effect and Tenant and Landlord hereby ratify and confirm their respective obligations thereunder.
10. Limitation of Landlord Liability. Redress for any claims against Landlord under the Lease and this First Amendment shall only be made against Landlord to the extent of Landlord’s interest in the property to which the Premises are a part, the rents, issues and proceeds thereof. The obligations of Landlord under the Lease and this First Amendment shall not be personally binding on, nor shall any resort be had to the private properties of, any of its trustees or board of directors and officers, as the case may be, the general partners thereof or any beneficiaries, stockholders, employees or agents of Landlord, or the investment manager, and in no case shall Landlord be liable to Tenant, or Tenant be liable to Landlord, hereunder for any lost profits, damage to business, or any form of special, indirect or consequential damages.
11. Successors and Assigns. Each of the covenants, conditions and agreements contained in this First Amendment shall inure to the benefit of and shall apply to and be binding upon the parties hereto and their respective heirs, legatees, devisees, executors, administrators and permitted successors and assigns and sublessees.
12. Miscellaneous. This First Amendment becomes effective only upon execution and delivery hereof by Landlord and Tenant. The captions of the paragraphs and subparagraphs in this First Amendment are inserted and included solely for convenience and shall not be considered or given any effect in construing the provisions hereof. All exhibits of the Lease are incorporated herein by reference. The submission of this First Amendment shall not constitute an offer, and this First Amendment shall not be effective and binding unless and until fully executed and delivered by every party hereto.
13. Counterparts; Facsimile and PDF Signatures. This First Amendment may be executed in one or more counterparts, each of which, when taken together, shall constitute one and the same document. The parties hereto consent and agree that this First Amendment may be signed and/or transmitted by facsimile machine, e-mail of a portable document format (.PDF) document or using electronic signature technology (e.g., via DocuSign or similar electronic signature technology), and that such signed electronic record shall be valid and as effective to bind the party so signing as a paper copy bearing such party’s handwritten signature. The parties further consent and agree that (i) to the extent a party signs this First Amendment using electronic signature technology, by clicking “SIGN”, such party is signing this First Amendment electronically, and (ii) the electronic signatures appearing on this First Amendment shall be treated, for purposes of validity, enforceability and admissibility, the same as handwritten
signatures.
IN WITNESS WHEREOF, Landlord and Tenant have executed this First Amendment as of the day and year first written above.
LANDLORD: |
TENANT: |
RREEF AMERICA REIT II CORP. PPP, a Maryland corporation |
REPARE THERAPEUTICS USA, INC., a Delaware corporation |
By: /s/ Gerald F. Ianetta |
By: /s/ Lloyd Segal |
Name: Gerald F. Ianetta |
Name: Lloyd Segal |
Title: Vice President |
Title: CEO |
By: /s/ David F. Crane |
Name: David F. Crane |
Title: Vice President |
Exhibit 10.2
Repare therapeutics inc.
Common Shares
SALES AGREEMENT
November 7, 2024
TD Securities (USA) LLC
1 Vanderbilt Avenue
New York, New York 10017
Ladies and Gentlemen:
Repare Therapeutics Inc., a corporation continued under the Business Corporations Act (Québec) (the “Company”), confirms its agreement (this “Agreement”) with TD Securities (USA) LLC (“TD Cowen”), as follows:
The Company has filed, in accordance with the provisions of the Securities Act of 1933, as amended, and the rules and regulations thereunder (collectively, the “Securities Act”), with the Commission a registration statement on Form S-3 (File No. 333-281298), including a base prospectus, relating to certain securities, including the Common Shares, to be issued from time to time by the Company, and which incorporates by reference documents that the Company has filed
or will file in accordance with the provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (collectively, the “Exchange Act”). The Company has prepared a prospectus supplement specifically relating to the Placement Shares (the “Prospectus Supplement”) to the base prospectus included as part of such registration statement. The Company has furnished to TD Cowen, for use by TD Cowen, copies of the prospectus included as part of such registration statement, as supplemented by the Prospectus Supplement, relating to the Placement Shares. Except where the context otherwise requires, such registration statement, and any post-effective amendment thereto, as amended when it became effective, including all documents filed as part thereof or incorporated by reference therein, and including any information contained in a Prospectus (as defined below) to be subsequently filed with the Commission pursuant to Rule 424(b) under the Securities Act or deemed to be a part of such registration statement pursuant to Rule 430B or 462(b) of the Securities Act, or any subsequent registration statement on Form S-3 filed by the Company with respect to the Placement Shares, is herein called the “Registration Statement.” The base prospectus, including all documents incorporated therein by reference, included in the Registration Statement, as it may be supplemented by the Prospectus Supplement, in the form in which such prospectus and/or Prospectus Supplement have most recently been filed by the Company with the Commission pursuant to Rule 424(b) under the Securities Act, together with any “issuer free writing prospectus,” as defined in Rule 433 under the Securities Act (“Rule 433”), relating to the Placement Shares that (i) is consented to by TD Cowen, hereinafter referred to as a “Permitted Free Writing Prospectus,” (ii) is required to be filed with the Commission by the Company or (iii) is exempt from filing pursuant to Rule 433(d)(5)(i), in each case in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company’s records pursuant to Rule 433(g), is herein called the “Prospectus.” Any reference herein to the Registration Statement, the Prospectus or any amendment or supplement thereto shall be deemed to refer to and include the documents incorporated by reference therein, and any reference herein to the terms “amend,” “amendment” or “supplement” with respect to the Registration Statement or the Prospectus shall be deemed to refer to and include the filing after the execution hereof of any document with the Commission deemed to be incorporated by reference therein. For purposes of this Agreement, all references to the Registration Statement, the Prospectus or to any amendment or supplement thereto shall be deemed to include any copy filed with the Commission pursuant to the Electronic Data Gathering Analysis and Retrieval System (“EDGAR”).
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Notwithstanding any other provision of this Agreement, the Company shall not offer, sell or deliver, or request the offer or sale, of any Placement Shares pursuant to this Agreement and, by notice to TD Cowen given by telephone (confirmed promptly by email), shall cancel any instructions for the offer or sale of any Placement Shares, and TD Cowen shall not be obligated to offer or sell any Placement Shares, (i) during any period in which the Company is, in possession of material non-public information, or (ii) at any time from and including the date on which the Company shall issue a press release containing, or shall otherwise publicly announce, its earnings, revenues or other results of operations (an “Earnings Announcement”) through and including the time that the Company files a Quarterly Report on Form 10-Q or an Annual Report on Form 10-K that includes consolidated financial statements as of and for the same period or periods, as the case may be, covered by such Earnings Announcement.
(a) The Company or TD Cowen may, upon notice to the other party in writing (including by email correspondence to each of the individuals of the other party set forth on Schedule 2, if receipt of such correspondence is actually acknowledged by any of the individuals to whom the notice is sent, other than via auto-reply) or by telephone (confirmed immediately by verifiable facsimile transmission or email correspondence to each of the individuals of the other party set forth on Schedule 2), suspend any sale of Placement Shares; provided, however, that such suspension shall not affect or impair either party’s obligations with respect to any Placement Shares sold hereunder prior to the receipt of such notice. While a suspension is in effect any obligation under Section 7(m), 7(n) and 7(o) with respect to delivery of certificates, opinion, or comfort letters to TD Cowen, shall be waived. Each of the parties agrees that no such notice under this Section 4 shall be effective against the other unless it is made to one of the individuals named on Schedule 2 hereto, as such schedule may be amended from time to time.
(b) If either TD Cowen or the Company has reason to believe that the exemptive provisions set forth in Rule 101(c)(1) of Regulation M under the Exchange Act are not satisfied with respect to the Common Shares, it shall promptly notify the other party, and TD Cowen may, at its sole discretion, suspend sales of the Placement Shares under this Agreement.
(c) The Registration Statement was declared effective on August 19, 2024. Notwithstanding any other provision of this Agreement, during any period in which the Registration Statement is no longer effective under the Securities Act, the Company shall promptly notify TD Cowen, the Company shall not request the sale of any Placement Shares, and TD Cowen shall not be obligated to sell or offer to sell any Placement Shares.
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(A) the subject of any sanctions administered or enforced by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), the United Nations Security Council, the European Union, His Majesty’s Treasury, or other relevant sanctions authorities, including, without limitation, designation on OFAC’s Specially Designated Nationals and Blocked Persons List or OFAC’s Foreign Sanctions Evaders List (as amended, collectively, “Sanctions”), or
(B) located, organized or resident in a country or territory that is the subject of comprehensive Sanctions (including, without limitation, the Crimea Region and the non-government controlled areas of the Zaporizhzhia and Kherson Regions of Ukraine (or any other Covered Region of Ukraine identified pursuant to Executive Order 14065), the so-called Donetsk People’s Republic, the so-called Luhansk People’s Republic, Cuba, Iran, North Korea and Syria) (“Sanctioned Countries”).
(ii) The Company will not, directly or indirectly, use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person:
(A) to fund or facilitate any activities or business of or with any Person or in any country or territory that, at the time of such funding or facilitation, is the subject of Sanctions or is a Sanctioned Country; or
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(B) in any other manner that will result in a violation of Sanctions by any Person (including any Person participating in the offering, whether as sales agent, advisor, investor or otherwise).
(iii) Since April 24, 2019, the Company and each of its subsidiaries have not knowingly engaged in, are not now knowingly engaged in, and will not engage in, any dealings or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions or is a Sanctioned Country.
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Any certificate signed by an officer of the Company and delivered to TD Cowen or to counsel for TD Cowen pursuant to or in connection with this Agreement shall be deemed to be a representation and warranty by the Company to TD Cowen as to the matters set forth therein.
The Company acknowledges that TD Cowen and, for purposes of the opinions to be delivered pursuant to Section 7 hereof, counsel to the Company and counsel to TD Cowen, will rely upon the accuracy and truthfulness of the foregoing representations and hereby consents to such reliance.
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(ii) All sums payable by the Company under this Agreement shall be paid free and clear of and without deductions or withholdings of any present or future taxes or duties, unless the deduction or withholding is required by law, in which case the Company shall pay, except where the tax or duty so deducted or withheld arises in respect of services rendered in Canada, such additional amount as will result in the receipt by TD Cowen of the full amount that would have been received had no deduction or withholding been made; provided, however, that no additional amounts shall be payable if TD Cowen determines (in its sole reasonable discretion and with no requirement to provide access to any tax returns or financial/tax information) that any withheld taxes would result in a tax credit that offsets taxes otherwise payable by TD Cowen with respect to the taxable year that includes the withholding.
(iii) All sums payable to TD Cowen shall be considered exclusive of any value added or similar taxes. Where the Company is obliged to pay value added or similar tax on any amount payable hereunder to TD Cowen, the Company shall in addition to the sum payable hereunder pay an amount equal to any applicable value added or similar tax.
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[Remainder of Page Intentionally Blank]
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If the foregoing correctly sets forth the understanding between the Company and TD Cowen, please so indicate in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement between the Company and TD Cowen.
Very truly yours,
TD SECURITIES (USA) LLC
By: /s/ Michael Murphy______________________
Name: Michael Murphy
Title: Managing Director
ACCEPTED as of the date
first-above written:
REPARE THERAPEUTICS INC.
By: /s/ Steve Forte__________________________
Name: Steve Forte
Title: Chief Financial Officer
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SCHEDULE 1
form of PLACEMENT NOTICE
From: [ ]
Cc: [ ]
To: [ ]
Subject: TD Cowen At the Market Offering—Placement Notice
Gentlemen:
Pursuant to the terms and subject to the conditions contained in the Sales Agreement between Repare Therapeutics Inc. (the “Company”), and TD Securities (USA) LLC (“TD Cowen”) dated November 7, 2024 (the “Agreement”), I hereby request on behalf of the Company that TD Cowen sell up to [ ] shares of the Company’s Common Shares, no par value, at a minimum market price of $_______ per share. Sales should begin on the date of this Notice and shall continue until [DATE] [all shares are sold].
SCHEDULE 2
Notice Parties
Company
Lloyd Segal Chief Executive Officer
Steve Forte Chief Financial Officer
TD Cowen
Michael J. Murphy Managing Director
William Follis Managing Director
Adriano Pierroz Director
Megan Sanford Analyst
SCHEDULE 3
Compensation
TD Cowen shall be paid compensation up to 3.0% of the gross proceeds from the sales of Common Shares pursuant to the terms of this Agreement.
Exhibit 7(m)
OFFICER CERTIFICATE
The undersigned, the duly qualified and elected _______________________, of Repare Therapeutics Inc., a corporation continued under the Business Corporations Act (Québec) (the “Company”), does hereby certify in such capacity and on behalf of the Company, pursuant to Section 7(m) of the Sales Agreement dated November 7, 2024 (the “Sales Agreement”) between the Company and TD Securities (USA) LLC, that to the best of the knowledge of the undersigned.
(i) The representations and warranties of the Company in Section 6 of the Sales Agreement (A) to the extent such representations and warranties are subject to qualifications and exceptions contained therein relating to materiality or Material Adverse Change, are true and correct on and as of the date hereof with the same force and effect as if expressly made on and as of the date hereof, except for those representations and warranties that speak solely as of a specific date and which were true and correct as of such date, and (B) to the extent such representations and warranties are not subject to any qualifications or exceptions, are true and correct in all material respects as of the date hereof as if made on and as of the date hereof with the same force and effect as if expressly made on and as of the date hereof except for those representations and warranties that speak solely as of a specific date and which were true and correct as of such date; and
(ii) The Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied pursuant to the Sales Agreement at or prior to the date hereof.
Paul Hastings LLP, Cooley LLP and Stikeman Elliott LLP are entitled to rely upon this Certificate in connection with the opinions given by such firms pursuant to the Sales Agreement.
By:
Name:
Title:
Date:
Exhibit 31.1
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Lloyd M. Segal, certify that:
Date: November 7, 2024 |
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By: |
/s/ Lloyd M. Segal |
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Lloyd M. Segal |
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President and Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Steve Forte, certify that:
Date: November 7, 2024 |
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By: |
/s/ Steve Forte |
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Steve Forte |
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Executive Vice President, Chief Financial Officer (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Repare Therapeutics Inc. (the “Company”) for the period ended September 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Lloyd M. Segal, as President and Chief Executive Officer of the Company, and Steve Forte, as Executive Vice President and Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:
Date: November 7, 2024 |
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/s/ Lloyd M. Segal |
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Lloyd M. Segal |
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President and Chief Executive Officer (Principal Executive Officer) |
Date: November 7, 2024 |
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/s/ Steve Forte |
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Steve Forte |
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Executive Vice President, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.