10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended March 31, 2023

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 May 1, 2023, the registrant had 36,269,993 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

4

Notes to Unaudited Condensed Consolidated Financial Statements

5

Item 2.

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

12

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

20

Item 4.

Controls and Procedures

20

PART II.

OTHER INFORMATION

21

Item 1.

Legal Proceedings

21

Item 1A.

Risk Factors

21

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

70

Item 3.

Defaults Upon Senior Securities

70

Item 4.

Mine Safety Disclosures

70

Item 5.

Other Information

70

Item 6.

Exhibits

71

Signatures

72

 

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 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, bank failures, 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.
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.
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 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 expect to rely on third parties to conduct clinical trials for our other targeted oncology programs, including IK-595, 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)

 

 

 

March 31,
2023

 

 

December 31,
2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

29,329

 

 

$

59,919

 

Marketable securities

 

 

108,484

 

 

 

97,028

 

Prepaid expenses and other current assets

 

 

3,365

 

 

 

3,063

 

Total current assets

 

 

141,178

 

 

 

160,010

 

Property and equipment, net

 

 

3,126

 

 

 

3,205

 

Right-of-use asset

 

 

4,918

 

 

 

5,255

 

Deposits and other assets

 

 

3,179

 

 

 

3,789

 

Total assets

 

$

152,401

 

 

$

172,259

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

2,759

 

 

$

2,093

 

Accrued expenses and other current liabilities

 

 

5,424

 

 

 

8,343

 

Operating lease liability

 

 

1,920

 

 

 

1,907

 

Deferred revenue

 

 

3,847

 

 

 

9,160

 

Total current liabilities

 

 

13,950

 

 

 

21,503

 

Long-term portion of operating lease liability

 

 

3,429

 

 

 

3,787

 

Total liabilities

 

 

17,379

 

 

 

25,290

 

Commitments and contingencies (Note 12)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred Stock, $0.001 par value - 10,000,000 shares authorized as of March 31, 2023
   and December 31, 2022;
No shares issued and outstanding as of March 31, 2023 or
   December 31, 2022

 

 

 

 

 

 

Common stock, $0.001 par value - 150,000,000 shares authorized, as of
   March 31, 2023 and December 31, 2022;
36,257,493 issued and
   outstanding as of March 31, 2023 and December 31, 2022

 

 

36

 

 

 

36

 

Additional paid-in capital

 

 

363,915

 

 

 

361,915

 

Accumulated other comprehensive loss

 

 

(491

)

 

 

(763

)

Accumulated deficit

 

 

(228,438

)

 

 

(214,219

)

Total stockholders’ equity

 

 

135,022

 

 

 

146,969

 

Total liabilities and stockholders’ equity

 

$

152,401

 

 

$

172,259

 

 

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 March 31,

 

 

 

2023

 

 

2022

 

Statement of Operations

 

 

 

 

 

 

Research and development revenue under collaboration agreement

 

$

5,313

 

 

$

3,384

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

 

15,552

 

 

 

14,343

 

General and administrative

 

 

5,276

 

 

 

6,003

 

Total operating expenses

 

 

20,828

 

 

 

20,346

 

Loss from operations

 

 

(15,515

)

 

 

(16,962

)

Other income (expense):

 

 

 

 

 

 

Interest income

 

 

730

 

 

 

172

 

Other income (expense)

 

 

566

 

 

 

(49

)

Total other income, net

 

 

1,296

 

 

 

123

 

Net loss

 

$

(14,219

)

 

$

(16,839

)

 

 

Other comprehensive loss:

 

 

 

 

 

 

Unrealized gain (loss) on marketable securities

 

 

272

 

 

 

(478

)

Total comprehensive loss

 

$

(13,947

)

 

$

(17,317

)

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

Net loss per share attributable to common stockholders basic and
   diluted

 

$

(0.39

)

 

$

(0.47

)

Weighted-average common stock outstanding, basic and diluted

 

 

36,257,493

 

 

 

36,075,407

 

 

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

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance as of December 31, 2022

 

 

36,257,493

 

 

$

36

 

 

$

361,915

 

 

$

(763

)

 

$

(214,219

)

 

$

146,969

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,000

 

 

 

 

 

 

 

 

 

2,000

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

272

 

 

 

 

 

 

272

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,219

)

 

 

(14,219

)

Balance as of March 31, 2023

 

 

36,257,493

 

 

$

36

 

 

$

363,915

 

 

$

(491

)

 

$

(228,438

)

 

$

135,022

 

 

 

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated
Other Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

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

 

 

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

3


 

IKENA ONCOLOGY, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(14,219

)

 

$

(16,839

)

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

 

 

 

 

 

 

Depreciation

 

 

231

 

 

 

180

 

Amortization of premiums and discounts on marketable securities

 

 

(530

)

 

 

42

 

Stock-based compensation

 

 

2,000

 

 

 

1,900

 

Non-cash operating lease expense

 

 

337

 

 

 

312

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

308

 

 

 

624

 

Accounts payable

 

 

666

 

 

 

4

 

Accrued expenses and other current liabilities

 

 

(2,919

)

 

 

(1,523

)

Lease liability

 

 

(345

)

 

 

(307

)

Deferred revenue

 

 

(5,313

)

 

 

(3,384

)

Deposits and other assets

 

 

 

 

 

(793

)

Net cash flows used in operating activities

 

 

(19,784

)

 

 

(19,784

)

Cash flows from investing activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

(152

)

 

 

(33

)

Purchase of marketable securities

 

 

(41,726

)

 

 

(166,018

)

Sales and maturities of marketable securities

 

 

31,072

 

 

 

 

Net cash flows used in investing activities

 

 

(10,806

)

 

 

(166,051

)

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from exercise of stock options

 

 

 

 

 

495

 

Net cash flows provided by financing activities

 

 

 

 

 

495

 

Net increase (decrease) in cash and cash equivalents and restricted cash

 

 

(30,590

)

 

 

(185,340

)

Cash, cash equivalents and restricted cash, beginning of period

 

 

60,791

 

 

 

233,089

 

Cash, cash equivalents and restricted cash, end of period

 

$

30,201

 

 

$

47,749

 

Cash and cash equivalents

 

$

29,329

 

 

$

46,877

 

Restricted cash included in other assets

 

 

872

 

 

 

872

 

Cash, cash equivalents and restricted cash, end of period

 

$

30,201

 

 

$

47,749

 

Supplemental cash flow information

 

 

 

 

 

 

Reclassification of deposits and other assets to prepaid expenses and other current assets

 

$

609,866

 

 

$

 

Noncash investing and financing activities

 

 

 

 

 

 

Unrealized gains (losses) on marketable securities

 

$

272

 

 

$

(478

)

 

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

4


 

IKENA ONCOLOGY, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Organization and Basis of Presentation

Ikena Oncology Inc. (the “Company”) is a targeted oncology company, focused on developing differentiated therapies for patients in need that target nodes of cancer growth, spread, and therapeutic resistance in the Hippo and RAS onco-signaling network. The Company’s lead targeted oncology program, IK-930, is a TEAD1-selective Hippo pathway inhibitor, a known tumor suppressor pathway that also drives resistance to multiple targeted therapies. The Company’s first program in the RAS pathways, IK-595, is designed to trap MEK and RAF in an inactive complex, more completely inhibiting RAS signals than existing inhibitors. In addition, the Company is developing IK-175, an aryl hydrocarbon receptor (“AHR”) antagonist in collaboration with Bristol-Myers Squibb Company (“Bristol-Myers Squibb”). The Company’s focus on patient-driven development allows it to research both known and novel targets, with a shared guiding principle of aiming to address the unmet needs of biomarker-defined patient populations. Since the Company commenced operations in 2016, it has advanced multiple product candidates into clinical development. In addition, the Company has a robust discovery engine and portfolio of early stage targeted oncology programs. Across the entirety of its pipeline, the Company aims to utilize its depth of institutional knowledge and breadth of tools to efficiently develop the right drug using the right modality for the right patient.

Basis of Presentation: The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting. Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the ASC and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

The accompanying condensed consolidated financial statements and footnotes to the financial statements have been prepared on the same basis as the most recently audited annual financial statements and, in the opinion of management, reflect all normal recurring adjustments necessary for the fair presentation of the Company’s financial position for the reported periods. The results of operations for any interim periods are not necessarily indicative of results to be expected for the year ending December 31, 2023, any other interim periods, or any future year or period. These condensed consolidated financial statements should be read in conjunction with, the Company’s audited consolidated financial statements for the year ended December 31, 2022, which were included in its Annual Report on Form 10-K that was filed with the Securities and Exchange Commission (“SEC”) on March 14, 2023.

2. Summary of Significant Accounting Policies

Principles of Consolidation: The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Arrys Therapeutics, Inc. (“Arrys”), Ikena Oncology Securities Corporation, and Amplify Medicines, Inc, (“Amplify”). All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates: The preparation of the Company’s financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Estimates and judgments are based on historical information and other market-specific or various relevant assumptions, including in certain circumstances, future projections, that management believes to be reasonable under the circumstances. Actual results could differ materially from estimates. Significant estimates and assumptions are used for, but not limited to the accruals for research and development expenses and research and development revenue under a collaboration agreement.

Summary of Significant Accounting Policies: The significant accounting policies and estimates used in the preparation of the accompanying consolidated financial statements are described in the Company’s audited consolidated financial statements for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K that was filed with the SEC on March 14, 2023. There have been no material changes in the Company’s significant accounting policies during the three months ended March 31, 2023 except as discussed below.

Concentration of Credit Risk and of Significant Suppliers: Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, and marketable securities. Cash and cash equivalents are deposited with federally insured financial institutions in the United States and may, at times, exceed federally insured limits. The Company places marketable securities with a highly rated financial institution. Additionally, as of March 31, 2023, the Company has not experienced any credit related losses on accounts that hold the Company’s cash, cash equivalents and marketable securities.

5


 

The Company is dependent on third-party manufacturers and clinical research organizations (“CROs”) to supply products and provide services for research and development activities in its programs. In particular, the Company relies and expects to continue to rely on a small number of manufacturers to supply it with its requirements for the active pharmaceutical ingredients and formulated drugs related to these programs. The Company also relies on at least two CROs to conduct its clinical trials. The Company’s programs could be adversely affected if a third-party manufacturer or a CRO is unable to successfully carry out their contractual obligations or meet expected deadlines. If a third-party manufacturer or a CRO needs to be replaced, the Company may not be able to complete its program development on its anticipated timelines and may incur additional expenses as a result, which could be significant.

Recent Accounting Pronouncements: From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by us as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on our consolidated financial statements and disclosures.

3. Fair Value Measurements

The following table presents information about the Company’s financial assets measured or disclosed at fair value by level within the fair value hierarchy (in thousands):

 

 

 

As of March 31,
2023

 

 

Quoted Prices in Active Markets
(Level 1)

 

 

Significant Observable Inputs
(Level 2)

 

 

Significant Unobservable Inputs
(Level 3)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

11,613

 

 

$

11,613

 

 

$

 

 

$

 

Corporate debt securities

 

 

3,496

 

 

 

 

 

 

3,496

 

 

 

 

U.S. treasury securities

 

 

10,936

 

 

 

 

 

 

10,936

 

 

 

 

Marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasury securities

 

 

48,885

 

 

 

 

 

 

48,885

 

 

 

 

Corporate debt securities

 

 

59,599

 

 

 

 

 

 

59,599

 

 

 

 

Total assets

 

$

134,529

 

 

$

11,613

 

 

$

122,916

 

 

$

 

 

 

 

As of December 31,
2022

 

 

Quoted Prices in Active Markets
(Level 1)

 

 

Significant Observable Inputs
(Level 2)

 

 

Significant Unobservable Inputs
(Level 3)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

55,861

 

 

$

55,861

 

 

$

 

 

$

 

Marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasury securities

 

 

22,606

 

 

 

 

 

 

22,606

 

 

 

 

Corporate debt securities

 

 

74,422

 

 

 

 

 

 

74,422

 

 

 

 

Total assets

 

$

152,889

 

 

$

55,861

 

 

$

97,028

 

 

$

 

 

During the three months ended March 31, 2023 and twelve months ended December 31, 2022, there were no transfers into or out of Level 3.

4. Marketable securities

The following table summarizes the Company's marketable securities (in thousands):

 

 

 

As of March 31, 2023

 

 

 

Amortized Cost

 

 

Gross Unrealized Gains

 

 

Gross Unrealized Losses

 

 

Fair Value

 

U.S. treasury securities

 

$

59,845

 

 

$

4

 

 

$

(28

)

 

$

59,821

 

Corporate debt securities

 

 

63,562

 

 

 

1

 

 

 

(468

)

 

 

63,095

 

Total

 

$

123,407

 

 

$

5

 

 

$

(496

)

 

$

122,916

 

 

6


 

 

 

 

December 31, 2022

 

 

 

Amortized Cost

 

 

Gross Unrealized Gains

 

 

Gross Unrealized Losses

 

 

Fair Value

 

U.S. treasury securities

 

$

22,630

 

 

$

 

 

$

(24

)

 

$

22,606

 

Corporate debt securities

 

 

75,161

 

 

 

 

 

 

(739

)

 

 

74,422

 

Total

 

$

97,791

 

 

$

 

 

$

(763

)

 

$

97,028

 

 

In accordance with the Company's investment policy, it places investments in investment grade securities with high credit quality issuers, and generally limits the amount of credit exposure to any one issuer. The Company evaluates securities for impairment at the end of each reporting period. Factors considered include whether a decline in fair value below the amortized cost basis is due to credit-related factors or non-credit-related factors, the financial condition and near-term prospects of the issuer, and the Company’s intent and ability to hold the investment to allow for an anticipated recovery in fair value.

 

As of March 31, 2023, the Company held 37 marketable securities in an unrealized loss position. The Company does not intend to sell its marketable securities and it is not more likely than not that the Company will be required to sell the investments before the recovery of their amortized cost bases, which may be maturity. The Company also believes that it will be able to collect both principal and interest amounts due at maturity. The Company did not record any impairment charges related to its available-for-sale securities during the three months ended March 31, 2023 and 2022. The Company did not recognize any credit-related allowance to available-for-sale securities as of the three months ended March 31, 2023 and 2022.

 

The fair values of the Company's marketable securities by classification in the condensed consolidated balance sheets were as follows:

 

 

As of March 31, 2023

 

 

As of December 31,
2022

 

Cash and cash equivalents

 

$

14,432

 

 

$

 

Marketable securities

 

 

108,484

 

 

 

97,028

 

Total

 

$

122,916

 

 

$

97,028

 

 

Marketable securities fair value by contractual maturity were as follows (in thousands):

 

 

 

As of
March 31, 2023

 

As of
December 31, 2022

 

Due in one year or less

 

$

111,617

 

$

79,652

 

Due after one year through five years

 

 

11,299

 

 

17,376

 

Total

 

$

122,916

 

$

97,028

 

 

5. Prepaid Expenses and Other Current Assets

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

 

 

 

As of March 31, 2023

 

 

As of December 31, 2022

 

Clinical, manufacturing and scientific development

 

$

1,862

 

 

$

1,372

 

Prepaid Insurance

 

 

90

 

 

 

727

 

Other

 

 

1,413

 

 

 

964

 

Total

 

$

3,365

 

 

$

3,063

 

 

7


 

6. Property and Equipment, net

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

 

 

 

As of March 31, 2023

 

 

As of December 31, 2022

 

Property and equipment:

 

 

 

 

 

 

Lab equipment

 

$

3,007

 

 

$

2,858

 

Leasehold improvements

 

 

1,219