10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended September 30, 2022

OR

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

For the transition period from __________________ to __________________

Commission File Number: 001-40287

 

IKENA ONCOLOGY, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

 

81-1697316

(State or other jurisdiction of

incorporation or organization)

 

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

645 Summer Street, Suite 101

Boston, MA

 

02210

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (857) 273-8343

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.001 per share

 

IKNA

 

The Nasdaq Global Market

 

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

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

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

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

 

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

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

As of October 31, 2022, the registrant had 36,257,493 shares of common stock, $0.001 par value per share, outstanding.

 

 

 


 

Table of Contents

 

 

 

Page

 

 

 

PART I.

FINANCIAL INFORMATION

1

Item 1.

Financial Statements (Unaudited)

1

 

Condensed Consolidated Balance Sheets

1

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

2

 

Condensed Consolidated Statements of Stockholders' Equity

3

 

Condensed Consolidated Statements of Cash Flows

5

 

Notes to Unaudited Condensed Consolidated Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

13

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

21

Item 4.

Controls and Procedures

22

PART II.

OTHER INFORMATION

23

Item 1.

Legal Proceedings

23

Item 1A.

Risk Factors

23

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

72

Item 3.

Defaults Upon Senior Securities

73

Item 4.

Mine Safety Disclosures

73

Item 5.

Other Information

73

Item 6.

Exhibits

74

Signatures

75

 

i


 

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains express or implied forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements involve risks, uncertainties, and other factors that may cause actual results, performance, or achievements to be materially different from the information expressed or implied by these forward-looking statements. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management and expected market growth are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

 

Forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

the initiation, timing, progress, results, and cost of our research and development programs and our current and future preclinical studies and clinical trials, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available, and our research and development programs;
our ability to efficiently discover and develop product candidates;
our ability and the potential to successfully manufacture our drug substances and product candidates for preclinical use, for clinical trials, and on a larger scale, for commercial use, if approved;
the ability and willingness of our third-party strategic collaborators to continue research and development activities relating to our development candidates and product candidates;
our ability to obtain funding for our operations necessary to complete further development and commercialization of our product candidates;
our ability to obtain and maintain regulatory approval of our product candidates;
our ability to commercialize our products, if approved;
the pricing and reimbursement of our product candidates, if approved;
the implementation of our business model, and strategic plans for our business and product candidates;
the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates;
estimates of our future expenses, revenue, capital requirements, and our needs for additional financing;
the potential benefits of strategic collaboration agreements, our ability to enter into strategic collaborations or arrangements, and our ability to attract collaborators with development, regulatory and commercialization expertise;
future agreements with third parties in connection with the commercialization of product candidates and any other approved product;
the size and growth potential of the markets for our product candidates, and our ability to serve those markets;
our financial performance;
the rate and degree of market acceptance of our product candidates;
regulatory developments in the United States and relevant foreign countries;
our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;
our ability to produce our products or product candidates with advantages in turnaround times or manufacturing cost;
the success of competing therapies that are or may become available;
our ability to attract and retain key scientific or management personnel;
the impact of laws and regulations;
our use of proceeds from our initial public offering;
developments relating to our competitors and our industry;
the effect of the ongoing COVID-19 pandemic, including mitigation efforts and economic effects, on any of the foregoing or other aspects of our business operations, including but not limited to our preclinical studies and clinical trials and any future studies or trials;

ii


 

the impact of global economic and political developments on our business, including rising inflation and capital market disruptions, economic sanctions and economic slowdowns or recessions that may result from such developments which could harm our research and development efforts as well as the value of our common stock and our ability to access capital markets; and
other risks and uncertainties, including those under the caption “Risk Factors.”

 

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly in the “Risk Factors” section, that could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, collaborations, joint ventures or investments that we may make or into which we may enter.

You should read this Quarterly Report on Form 10-Q and the documents that we reference herein and have filed or incorporated by reference as exhibits hereto completely and with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

iii


 

Summary of the Material and Other Risks Associated with Our Business

 

Our business is subject to numerous material and other risks and uncertainties that you should be aware of in evaluating our business. These risks include, but are not limited to, the following:

 

We are a targeted oncology company with a limited operating history.
We have incurred significant net losses since our inception and anticipate that we will continue to incur losses for the foreseeable future.
We have no products approved for commercial sale and have not generated any revenue from product sales.
We will require additional capital to finance our operations, which may not be available on acceptable terms, or at all. If we are unable to raise capital when needed or on terms acceptable to us, we would be forced to delay, reduce or eliminate some of our product development programs or commercialization efforts.
Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.
The COVID-19 pandemic, or a similar pandemic, epidemic, or outbreak of an infectious disease, may materially and adversely affect our business and our financial results and could cause a disruption to the development of our product candidates.
We have never successfully completed any clinical trials for our oncology programs, and we may be unable to do so for any product candidates we develop. Certain of our oncology programs are still in preclinical development and may never advance to clinical development.
Our programs are focused on the development of oncology therapeutics for patients with genetically defined or biomarker-driven cancers, which is a rapidly evolving area of science, and the approach we are taking to discover and develop drugs is novel and may never lead to approved or marketable products.
Clinical product development involves a lengthy and expensive process, with an uncertain outcome.
We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do.
If the market opportunities for our programs and product candidates are smaller than we estimate or if any regulatory approval that we obtain is based on a narrower definition of the patient population, our revenue and ability to achieve profitability will be adversely affected, possibly materially.
We rely on third parties to conduct our Phase 1 clinical trials of IK-930 and IK-175 and Phase 1b clinical trial of IK-007 and expect to rely on third parties to conduct clinical trials for our other targeted oncology and TME programs, as well as investigator-sponsored clinical trials of our product candidates. If these third parties do not successfully carry out their contractual duties, comply with regulatory requirements, or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be substantially harmed.
We have entered into collaborations and may enter into additional collaborations in the future, and we might not realize the anticipated benefits of such collaborations.
If we are unable to obtain and maintain patent and other intellectual property protection for our technology and product candidates or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and drugs similar or identical to ours, and our ability to successfully commercialize our technology and drugs may be impaired.
Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval of our product candidates in other jurisdictions.
Our future success depends on our ability to retain key executives and experienced scientists and to attract, retain and motivate qualified personnel.
The dual class structure of our common stock may limit your ability to influence corporate matters and may limit your visibility with respect to certain transactions.

The material and other risks summarized above should be read together with the text of the full risk factors below and with the other information set forth in this Quarterly Report, including our consolidated financial statements and the related notes, as well as with other documents that we file with the SEC. If any such material and other risks and uncertainties actually occur, our business, prospects, financial condition and results of operations could be materially and adversely affected. The risks summarized above, or described in full below, are not the only risks that we face. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial may also materially adversely affect our business, prospects, financial condition and results of operations.

iv


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

IKENA ONCOLOGY, INC.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

 

 

 

 

September 30,
2022

 

 

December 31,
2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

67,074

 

 

$

232,217

 

Marketable securities

 

 

107,287

 

 

 

 

Prepaid expenses and other current assets

 

 

3,617

 

 

 

4,299

 

Total current assets

 

 

177,978

 

 

 

236,516

 

Property and equipment, net

 

 

3,115

 

 

 

2,439

 

Right-of-use asset

 

 

5,585

 

 

 

6,538

 

Deposits and other assets

 

 

3,790

 

 

 

2,386

 

Total assets

 

$

190,468

 

 

$

247,879

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

2,361

 

 

$

2,384

 

Accrued expenses and other current liabilities

 

 

8,677

 

 

 

5,854

 

Operating lease liability

 

 

1,894

 

 

 

1,851

 

Deferred revenue

 

 

12,108

 

 

 

17,100

 

Total current liabilities

 

 

25,040

 

 

 

27,189

 

Long-term portion of operating lease liability

 

 

4,138

 

 

 

5,135

 

Deferred revenue, net of current portion

 

 

2,502

 

 

 

7,678

 

Total liabilities

 

 

31,680

 

 

 

40,002

 

Commitments and contingencies (Note 12)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred Stock, $0.001 par value - 10,000,000 shares authorized as of September 30, 2022
   and December 31, 2021;
No shares issued and outstanding as of September 30, 2022 or
   December 31, 2021

 

 

 

 

 

 

Common stock, $0.001 par value, 150,000,000 shares authorized, 36,257,493
   issued and outstanding as of September 30, 2022;
150,000,000 shares authorized,
   
35,975,034 issued and outstanding as of December 31, 2021

 

 

36

 

 

 

36

 

Additional paid-in capital

 

 

360,055

 

 

 

353,295

 

Accumulated other comprehensive loss

 

 

(1,181

)

 

 

 

Accumulated deficit

 

 

(200,122

)

 

 

(145,454

)

Total stockholders’ equity

 

 

158,788

 

 

 

207,877

 

Total liabilities and stockholders’ equity

 

$

190,468

 

 

$

247,879

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

1


 

IKENA ONCOLOGY, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Statement of Operations

 

 

 

 

 

 

 

 

 

 

 

 

Research and development revenue under collaboration agreement

 

$

6,402

 

 

$

3,746

 

 

$

10,168

 

 

$

10,768

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

18,850

 

 

 

13,375

 

 

 

48,682

 

 

 

34,770

 

General and administrative

 

 

5,428

 

 

 

4,893

 

 

 

17,276

 

 

 

12,928

 

Total operating expenses

 

 

24,278

 

 

 

18,268

 

 

 

65,958

 

 

 

47,698

 

Loss from operations

 

 

(17,876

)

 

 

(14,522

)

 

 

(55,790

)

 

 

(36,930

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

576

 

 

 

7

 

 

 

1,256

 

 

 

18

 

Other expense

 

 

(38

)

 

 

 

 

 

(134

)

 

 

 

Total other income, net

 

 

538

 

 

 

7

 

 

 

1,122

 

 

 

18

 

Net loss

 

$

(17,338

)

 

$

(14,515

)

 

$

(54,668

)

 

$

(36,912

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on marketable securities

 

 

(77

)

 

 

 

 

 

(1,181

)

 

 

 

Total comprehensive loss

 

$

(77

)

 

$

 

 

$

(1,181

)

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share attributable to common stockholders basic and
   diluted

 

$

(0.48

)

 

$

(0.40

)

 

$

(1.51

)

 

$

(1.46

)

Weighted-average common stocks outstanding, basic and diluted

 

 

36,257,074

 

 

 

35,860,824

 

 

 

36,165,143

 

 

 

25,305,212

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

2


 

IKENA ONCOLOGY, INC.

Condensed Consolidated Statement of Stockholders’ Equity

(in thousands, except share amounts)

 

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated
Other Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income

 

 

Deficit

 

 

Equity

 

Balance as of December 31, 2021

 

 

35,975,034

 

 

$

36

 

 

$

353,295

 

 

$

 

 

$

(145,454

)

 

$

207,877

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,900

 

 

 

 

 

 

 

 

 

1,900

 

Exercise of stock options

 

 

134,500

 

 

 

 

 

 

495

 

 

 

 

 

 

 

 

 

495

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(478

)

 

 

 

 

 

(478

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,839

)

 

 

(16,839

)

Balance as of March 31, 2022

 

 

36,109,534

 

 

 

36

 

 

 

355,690

 

 

 

(478

)

 

 

(162,293

)

 

 

192,955

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,955

 

 

 

 

 

 

 

 

 

1,955

 

Exercise of stock options

 

 

142,443

 

 

 

 

 

 

575

 

 

 

 

 

 

 

 

 

575

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(626

)

 

 

 

 

 

(626

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20,491

)

 

 

(20,491

)

Balance as of June 30, 2022

 

 

36,251,977

 

 

 

36

 

 

 

358,220

 

 

 

(1,104

)

 

 

(182,784

)

 

 

174,368

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,811

 

 

 

 

 

 

 

 

 

1,811

 

Exercise of stock options

 

 

5,516

 

 

 

 

 

 

24

 

 

 

 

 

 

 

 

 

24

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(77

)

 

 

 

 

 

(77

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,338

)

 

 

(17,338

)

Balance as of September 30, 2022

 

 

36,257,493

 

 

$

36

 

 

$

360,055

 

 

$

(1,181

)

 

$

(200,122

)

 

$

158,788

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

3


 

IKENA ONCOLOGY, INC.

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity

(in thousands, except share amounts)

 

 

 

Redeemable
Convertible
Preferred Stock

 

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated

 

 

Total
Stockholders’ Equity

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

(Deficit)

 

Balance as of December 31, 2020

 

 

169,396,576

 

 

$

205,979

 

 

 

 

3,096,903

 

 

$

3

 

 

$

10,288

 

 

$

(111,339

)

 

$

(101,048

)

Initial public offering, net of
   issuance costs of $
2.4 million

 

 

 

 

 

 

 

 

 

8,984,375

 

 

 

9

 

 

 

131,293

 

 

 

 

 

 

131,302

 

Conversion of convertible
   preferred stock into common
   stock

 

 

(169,396,576

)

 

 

(205,979

)

 

 

 

23,678,568

 

 

 

24

 

 

 

205,955

 

 

 

 

 

 

205,979

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

885

 

 

 

 

 

 

885

 

Exercise of stock options

 

 

 

 

 

 

 

 

 

91,395

 

 

 

 

 

 

242

 

 

 

 

 

 

242

 

Net loss and comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,716

)

 

 

(9,716

)

Balance as of March 31, 2021

 

 

 

 

 

 

 

 

 

35,851,241

 

 

 

36

 

 

 

348,663

 

 

 

(121,055

)

 

 

227,644

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,262

 

 

 

 

 

 

1,262

 

Exercise of stock options

 

 

 

 

 

 

 

 

 

7,878

 

 

 

 

 

 

35

 

 

 

 

 

 

35

 

Net loss and comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,681

)

 

 

(12,681

)

Balance as of June 30, 2021

 

 

 

 

 

 

 

 

 

35,859,119

 

 

 

36

 

 

 

349,960

 

 

 

(133,736

)

 

 

216,260

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,449

 

 

 

 

 

 

1,449

 

Exercise of stock options

 

 

 

 

 

 

 

 

 

18,675

 

 

 

 

 

 

69

 

 

 

 

 

 

69

 

Net loss and comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,515

)

 

 

(14,515

)

Balance as of September 30, 2021

 

 

 

 

$

 

 

 

$

35,877,794

 

 

$

36

 

 

$

351,478

 

 

$

(148,251

)

 

$

203,263

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

4


 

IKENA ONCOLOGY, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(54,668

)

 

$

(36,912

)

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

 

 

 

 

 

 

Depreciation

 

 

541

 

 

 

381

 

Amortization of marketable securities

 

 

103

 

 

 

 

Stock-based compensation

 

 

5,666

 

 

 

3,596