Ikena Oncology | SEC Filing

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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2023

☐ 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.

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 August 1, 2023, the registrant had 42,301,253 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	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4.	Controls and Procedures	21
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	71
Item 3.	Defaults Upon Senior Securities	72
Item 4.	Mine Safety Disclosures	72
Item 5.	Other Information	72
Item 6.	Exhibits	73
Signatures		74

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 and underwritten registered offering;

•

developments relating to our competitors and our industry;

•

the effect of the COVID-19 pandemic, or a similar pandemic, epidemic, or outbreak of an infectious disease, 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;

•

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.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

IKENA ONCOLOGY, INC.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)


	June 30, 2023			December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	70,868		$	59,919
Marketable securities		86,444			97,028
Prepaid expenses and other current assets		3,334			3,063
Total current assets		160,646			160,010
Property and equipment, net		2,875			3,205
Right-of-use asset		4,575			5,255
Deposits and other assets		3,668			3,789
Total assets	$	171,764		$	172,259
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,772		$	2,093
Accrued expenses and other current liabilities		6,455			8,343
Operating lease liability		1,937			1,907
Deferred revenue		1,844			9,160
Total current liabilities		12,008			21,503
Long-term portion of operating lease liability		3,056			3,787
Total liabilities		15,064			25,290
Commitments and contingencies (Note 12)
Stockholders’ equity:
Preferred Stock, $0.001 par value - 10,000,000 shares authorized as of June 30, 2023 and December 31, 2022; No shares issued and outstanding as of June 30, 2023 or December 31, 2022		—			—
Common stock, $0.001 par value - 150,000,000 shares authorized and 42,299,478 issued and outstanding as of June 30, 2023 and 150,000,000 shares authorized and 36,257,493 issued and outstanding as of December 31, 2022		42			36
Additional paid-in capital		402,667			361,915
Accumulated other comprehensive loss		(456	)		(763	)
Accumulated deficit		(245,553	)		(214,219	)
Total stockholders’ equity		156,700			146,969
Total liabilities and stockholders’ equity	$	171,764		$	172,259

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

IKENA ONCOLOGY, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)


	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Statement of Operations
Research and development revenue under collaboration agreement	$	2,004		$	382		$	7,316		$	3,766
Operating expenses:
Research and development		15,172			15,488			30,723			29,831
General and administrative		5,322			5,845			10,598			11,848
Total operating expenses		20,494			21,333			41,321			41,679
Loss from operations		(18,490	)		(20,951	)		(34,005	)		(37,913	)
Other income (expense):
Investment income		1,381			460			2,677			583
Other expense		(6	)		—			(6	)		—
Total other income, net		1,375			460			2,671			583
Net loss	$	(17,115	)	$	(20,491	)	$	(31,334	)	$	(37,330	)

Other comprehensive loss:
Unrealized gain (loss) on marketable securities		35			(626	)		(456	)		(1,104	)
Total comprehensive loss	$	(17,080	)	$	(21,117	)	$	(31,790	)	$	(38,434	)

Net loss per share:
Net loss per share attributable to common stockholders basic and diluted	$	(0.44	)	$	(0.57	)	$	(0.83	)	$	(1.03	)
Weighted-average common stock outstanding, basic and diluted		39,292,710			36,160,951			37,783,486			36,118,415

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

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
Issuance of common stock for underwritten registered offering, net of offering costs of $2.6 million		6,110,000			6		37,415						—			37,421
Repurchase of common stock		(97,500	)		—		(663	)					—			(663	)
Stock-based compensation		—			—		1,879			—			—			1,879
Exercise of stock options		29,485			—		121			—			—			121
Other comprehensive income		—			—		—			35			—			35
Net loss		—			—		—			—			(17,115	)		(17,115	)
Balance as of June 30, 2023		42,299,478		$	42	$	402,667		$	(456	)	$	(245,553	)	$	156,700


	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
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

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

IKENA ONCOLOGY, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)


	Six Months Ended June 30,
	2023			2022
Cash flows from operating activities
Net loss	$	(31,334	)	$	(37,330	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation		473			328
Amortization of premiums and discounts on marketable securities		(1,132	)		69
Stock-based compensation		3,879			3,855
Non-cash operating lease expense		681			628
Loss on disposal of property and equipment		5			173
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		339			(2,036	)
Accounts payable		(321	)		952
Accrued expenses and other current liabilities		(2,011	)		(693	)
Lease liability		(701	)		(623	)
Deferred revenue		(7,316	)		(3,765	)
Deposits and other assets		(489	)		(793	)
Net cash flows used in operating activities		(37,927	)		(39,235	)
Cash flows from investing activities
Purchases of property and equipment		(152	)		(69	)
Sale of property and equipment		4			—
Purchase of marketable securities		(47,050	)		(174,996	)
Sales and maturities of marketable securities		59,072			29,500
Net cash flows provided by (used in) investing activities		11,874			(145,565	)
Cash flows from financing activities
Proceeds from issuance of common stock for underwritten registered offering, net of offering costs		37,544			—
Repurchase of common stock		(663	)		—
Proceeds from exercise of stock options		121			1,070
Net cash flows provided by financing activities		37,002			1,070
Net increase (decrease) in cash and cash equivalents and restricted cash		10,949			(183,730	)
Cash, cash equivalents and restricted cash, beginning of period		60,791			233,089
Cash, cash equivalents and restricted cash, end of period	$	71,740		$	49,359
Cash and cash equivalents	$	70,868		$	48,487
Restricted cash included in other assets		872			872
Cash, cash equivalents and restricted cash, end of period	$	71,740		$	49,359
Supplemental cash flow information
Noncash investing and financing activities
Purchases of property and equipment in accounts payable and accrued expenses	$	—		$	943
Underwritten registered offering costs in accrued expenses	$	123		$	—

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

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 six months ended June 30, 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 June 30, 2023, the Company has not experienced any credit related losses on accounts that hold the Company’s cash, cash equivalents and marketable securities.

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 June 30,
2023

Quoted Prices in Active Markets
(Level 1)