CYTEIR THERAPEUTICS, INC. The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our consolidated financial
statements and the related notes to those statements included elsewhere in this
Quarterly Report on Form 10-Q and our audited financial statements and notes
thereto for the year ended
In addition to historical financial information, the following discussion and
analysis contains forward-looking statements that involve risks, uncertainties
and assumptions. Some of the numbers included herein have been rounded for the
convenience of presentation. Our actual results may differ materially from those
anticipated in these forward-looking statements as a result of many factors,
including those discussed under "Risk Factors" in our Annual Report on Form 10-K
for the fiscal year ended
Overview
We are a clinical-stage biotechnology company focused on discovering and developing the next-generation of precision oncology medicines that cause cancer cell death in specific subsets of cancer patients through a therapeutic strategy known as synthetic lethality. Synthetic lethality is a clinically validated approach to drug development and arises when the occurrence of two cellular conditions is lethal when occurring simultaneously but tolerated when occurring individually.
Our lead program, CYT-0851, an investigational monocarboxylate transporter inhibitor, or MCT inhibitor, is currently being evaluated in a phase 1/2 clinical trial as a monotherapy and in combination with standard-of-care therapy in patients with hematologic malignancies and solid tumors. Inhibiting MCT function in glycolytic cancer cells leads to an accumulation of intracellular lactate that impairs glycolysis and inhibits tumor cell growth, making MCTs an attractive target for cancer therapy. We previously reported results of the dose-escalation portion of the Phase 1/2 study of CYT-0851 up to the maximum feasible daily dose of 1200 mg and declared the maximum tolerated dose of 600 mg per day, with the recommended dose of 400 mg per day.
We are currently evaluating CYT-0851 as a monotherapy in six ongoing phase 2 expansion cohorts in patients with hematologic malignancies and solid tumors, and as a combination therapy in two ongoing phase 1 cohorts with CYT-0851 in combination with capecitabine or gemcitabine. We previously announced halting a phase 2 monotherapy cohort in multiple myeloma and a phase 1 combination cohort with CYT-0851 in combination with rituximab and bendamustine due to difficulty with enrollment from the competition in these rapidly evolving therapeutic landscapes. The current status of enrollment and expected timing for initial data from these cohorts is as follows:
Phase 2 Monotherapy Enrollment Status Expected Timing for Cohorts Initial First Stage Data Sarcoma Complete First quarter 2023 Pancreatic Complete First quarter 2023 Ovarian Complete First quarter 2023 Triple Negative Breast Ongoing First half 2023 Diffuse Large B-Cell Ongoing Mid-2023 Lymphoma Follicular Lymphoma Ongoing Mid-2023 Multiple Myeloma Discontinued Discontinued
Phase 1 Combination Dose- Enrollment Status Expected Timing for Safety Escalation Cohorts
and Early Efficacy Data
CYT-0851 + Capecitabine Ongoing, expected First half 2023
completion by year end
2022
CYT-0851 + Gemcitabine Ongoing, expected First half 2023
completion in first half
2023
CYT-0851 + Rituximab and Discontinued Discontinued
Bendamustine
In
16
--------------------------------------------------------------------------------
We continue to advance two additional drug discovery projects focused on identifying inhibitors of DNA damage repair targets that exploit specific synthetic lethalities. The first of these undisclosed targets (Target 2) plays a key role in Non-Homologous End Joining, or NHEJ, and the second (Target 3) in Microhomology-Mediated End Joining, or MMEJ, DNA repair pathways. For both targeted drug discovery projects, we have identified subsets of cancers that, we believe, uniquely depend on the target of interest for their survival and we are working to identify patient selection biomarkers to identify sensitive cancer subsets for use in clinical development.
Since our inception in 2012, we have focused primarily on organizing and
staffing our company, business planning, raising capital, establishing our
intellectual property portfolio and performing research and development of novel
therapeutics. We do not have any drug candidates approved for sale and have not
generated any revenue from product sales. Since our inception, we have funded
our operations primarily with proceeds from the sale of redeemable convertible
preferred stock and have raised an aggregate of approximately
We have incurred significant operating losses since inception, including net
losses of
•
continue the research and development of our drug candidates;
•
initiate and conduct additional preclinical studies and clinical trials for our drug candidates;
•
further develop and refine the manufacturing processes for our drug candidates;
•
seek regulatory approvals and pursue commercialization for any of our drug candidates that successfully complete clinical trials;
•
seek to identify and validate additional drug candidates and their associated biomarkers;
•
obtain, maintain, protect and enforce our intellectual property portfolio;
•
seek to attract and retain new and existing skilled personnel;
•
acquire or in-license other drug candidates and technologies;
•
create additional infrastructure to support our operations as a public company and incur increased legal, accounting, investor relations and other expenses; and
•
experience delays or encounter issues with any of the above.
We will not generate any revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for one or more of our drug candidates, if ever. If we obtain regulatory approval for any of our drug candidates, we expect to incur significant expenses related to developing our internal commercialization capability to support product sales, marketing and distribution.
We expect to incur significant expenses and operating losses for the foreseeable future as we advance our drug candidates through preclinical and clinical development, seek regulatory approval and pursue commercialization of any approved drug candidates. We expect that our research and development and general and administrative costs will increase in connection with our planned research and development activities. In addition, since the completion of our initial public offering, or IPO, we expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses that we did not incur as a private company. If we receive regulatory approval for any of our other drug candidates, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution, depending on where we choose to commercialize. We may also require additional capital to pursue in-licenses or acquisitions of other drug candidates.
If we are unable to obtain funding, we will be forced to delay, reduce or eliminate some or all of our research and development programs, product portfolio expansion and ultimate commercialization efforts, which could adversely affect our business prospects, or we may be unable to continue operations. Although we continue to pursue these plans, there is no assurance that we will be successful in obtaining sufficient funding on terms acceptable to us to fund continuing operations, if at all.
17
--------------------------------------------------------------------------------
As of
COVID-19 business update
In response to the ongoing COVID-19 pandemic, we implemented business continuity plans designed to address and mitigate the impact of the COVID-19 pandemic on our employees and our business, including our clinical trials. Our work in laboratories and facilities has been organized to reduce risk of COVID-19 transmission. The extent of future impact of the COVID-19 pandemic on our business, operations and clinical development timelines and plans remains uncertain, and will depend on certain developments, including the duration and spread of the pandemic and its impact on our clinical trial enrollment, trial sites, contract research organizations, or CROs, contract manufacturing organizations, or CMOs, and other third parties with whom we do business, as well as its impact on regulatory authorities and our key scientific and management personnel. While we have experienced limited financial impacts to date, given the global economic slowdown, the overall disruption of global healthcare systems and the other risks and uncertainties associated with the pandemic, our business, financial condition and results of operations ultimately could be materially adversely affected. We continue to closely monitor the COVID-19 pandemic as we evolve our clinical development plans.
Components of results of operations
Revenue
To date, we have not generated any revenue from product sales. If our development efforts for our drug candidates and preclinical programs are successful and result in regulatory approval, we may generate revenue in the future from product sales.
Operating expenses
Research and development expenses
Research and development expenses consist primarily of costs incurred in connection with the preclinical and clinical development and manufacture of our drug candidates, and include:
•
personnel-related expenses, including salaries, bonuses, benefits, stock-based compensation and other related costs for individuals involved in research and development activities;
•
external research and development expenses incurred under agreements with CROs as well as investigative sites and consultants that conduct our clinical trials and other scientific development services;
•
costs incurred under agreements with CMOs for developing and manufacturing material for our preclinical studies and clinical trials;
•
costs of outside consultants, including their fees, stock-based compensation and related travel expenses;
•
costs related to compliance with regulatory requirements;
•
costs of laboratory supplies and acquiring, developing and manufacturing study materials; and
•
facilities and other allocated expenses, which include direct and allocated expenses for rent, insurance and other operating costs.
Costs for external development activities are recognized based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors and our clinical investigative sites. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our consolidated financial statements as prepaid or accrued research and development expenses. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses and expensed as the related goods are delivered or the services are performed.
A significant portion of our research and development costs have been external costs, which we track on a program-by-program basis after a clinical drug candidate has been identified. Our internal research and development costs are primarily personnel-related costs, internal lab costs and other indirect costs. The majority of our external research and development expenses to date have been incurred in connection with CYT-0851.
We do not allocate employee costs, costs associated with our discovery efforts, and facilities, including depreciation or other indirect costs, to specific programs because these costs are deployed across multiple programs and, as such, are
18
--------------------------------------------------------------------------------
not separately classified. We use internal resources and third-party consultants primarily to conduct our research and discovery activities as well as for managing our process development, manufacturing and clinical development activities.
The successful development of our drug candidates is highly uncertain. We plan to substantially increase our research and development expenses for the foreseeable future as we continue our existing clinical trial, initiate future clinical trials for our drug candidates and continue to discover and develop additional drug candidates. Therefore, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development and commercialization of our future drug candidates. We are also unable to predict when, if ever, material net cash inflows will commence from the sale of CYT-0851 or potential future drug candidates, if approved. This is due to the numerous risks and uncertainties associated with developing drug candidates, including the uncertainty of:
•
the scope, rate of progress and expenses of our ongoing research activities and clinical trials and other research and development activities;
•
successful patient enrollment in, and the initiation and completion of, clinical trials;
•
establishing an appropriate safety profile;
•
whether our drug candidates show safety and efficacy in our clinical trials;
•
receipt of marketing approvals from applicable regulatory authorities;
•
establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers;
•
obtaining, maintaining, protecting and enforcing patent and trade secret protection and regulatory exclusivity for our drug candidates;
•
commercializing drug candidates, if and when approved, whether alone or in collaboration with others; and
•
continued acceptable safety profile of the products following any regulatory approval.
Any changes in the outcome of any of these variables with respect to the development of our drug candidates in preclinical and clinical development could mean a significant change in the costs and timing associated with the development of these drug candidates. We may never succeed in achieving regulatory approval for any of our drug candidates. We may obtain unexpected results from our clinical trials. We may elect to discontinue, delay or modify clinical trials of some drug candidates or focus on others. For example, if the FDA 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 planned clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development of that drug candidate.
General and administrative expenses
General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in our executive, finance, corporate and business development and administrative functions. General and administrative expenses also include professional fees for legal, patent, accounting, auditing, tax and consulting services, and facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs.
We expect that our general and administrative expenses will increase in the future as we increase our general and administrative headcount to support our continued research activities and development of our drug candidates.
Other income (expense)
Other income (expense) primarily consists of interest income earned on cash equivalents that generate interest on a monthly basis.
19
--------------------------------------------------------------------------------
Results of operations
Comparison of the three months ended
The following table summarizes our results of operations:
Three Months Ended
September 30,
(in thousands) 2022 2021 Change
Operating expenses:
Research and development $ 8,272 $ 8,205 $ 67
General and administrative 3,487 3,547 (60 )
Total operating expenses 11,759 11,752 7
Loss from operations (11,759 ) (11,752 ) (7 )
Other income(expense):
Other income(expense) 714 48 666
Total other income(expense) 714 48 666
Net loss $ (11,045 ) $ (11,704 ) $ 659 Research and development expenses
The following table summarizes our research and development costs for each of
the periods presented:
Three Months Ended
September 30,
(in thousands) 2022 2021 Change
Direct research and development expenses by
program:
MCT inhibitor programs $ 3,122 $ 5,356 $ (2,234 )
Unallocated research and development
expenses:
Personnel expenses (including stock-based
compensation) 3,207 2,304 903
Other expenses 1,943 545 1,398
Total research and development expenses
Research and development expenses for the three months ended
•
a
•
a
•
a
General and administrative expenses
General and administrative expenses were
•
a
•
a
Total other income
Total other income for the three months ended
20
--------------------------------------------------------------------------------
Comparison of the nine months ended
The following table summarizes our results of operations:
Nine Months Ended
September 30,
(in thousands) 2022 2021 Change
Operating expenses:
Research and development $ 27,154 $ 22,704 $ 4,450
General and administrative 10,963 7,693 3,270
Total operating expenses 38,117 30,397 7,720
Loss from operations (38,117 ) (30,397 ) (7,720 )
Other income(expense):
Other income(expense) 849 86 763
Total other income(expense) 849 86 763
Net loss $ (37,268 ) $ (30,311 ) $ (6,957 ) Research and development expenses
The following table summarizes our research and development costs for each of
the periods presented:
Nine Months Ended
September 30,
(in thousands) 2022 2021 Change
Direct research and development expenses by
program:
MCT inhibitor programs $ 12,699 $ 14,038 $ (1,339 )
Unallocated research and development
expenses:
Personnel expenses (including stock-based
compensation) 9,311 5,912 3,399
Other expenses 5,144 2,754 2,390
Total research and development expenses
Research and development expenses were
•
a
•
a
•
a
General and administrative expenses
General and administrative expenses were
•
a
•
a
Total other income
Total other income for the nine months ended
21
--------------------------------------------------------------------------------
Liquidity and capital resources
Sources of liquidity
Since our inception, we have not recognized any product revenue 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.
We have funded our operations primarily with proceeds from the sale of
redeemable convertible preferred stock and the sale of our common stock in our
IPO. From inception through
Funding requirements
As of
We expect to incur significant expenses and operating losses for the foreseeable future as we advance our drug candidates through preclinical and clinical development, seek regulatory approval and pursue commercialization of any approved drug candidates. We expect that our research and development and general and administrative costs will increase in connection with our planned research and development activities. In addition, since the completion of our IPO, we have incurred and expect to continue to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses that we did not incur as a private company. If we receive regulatory approval for any of our other drug candidates, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution, depending on where we choose to commercialize. We may also require additional capital to pursue in-licenses or acquisitions of other drug candidates.
Because of the numerous risks and uncertainties associated with research, development and commercialization of our drug candidates, we are unable to estimate the exact amount of our working capital requirements. Our future capital requirements will depend on many factors, including:
•
the continuation, timing, costs, progress and results of our planned clinical trials of CYT-0851;
•
the progress of preclinical development and possible clinical trials of our current earlier-stage programs;
•
the scope, progress, results and costs of our research programs and preclinical development of any additional drug candidates that we may pursue;
•
the development requirements of other drug candidates that we may pursue;
•
the outcome, timing and cost of meeting regulatory requirements established by the FDA and other regulatory authorities;
•
the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our drug candidates for which we receive marketing approval;
•
the cost of expanding, maintaining, protecting and enforcing our intellectual property portfolio, including filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights;
•
the cost of defending potential intellectual property disputes, including patent infringement actions brought by third parties against us or any of our drug candidates;
•
the extent to which we in-license or acquire rights to other products, which may delay the development of our drug candidates;
•
the extent to which the impact of COVID-19 or other pandemics may delay the development of our drug candidates;
•
our headcount growth and associated costs as we expand our research and development, increase our office space, and establish a commercial infrastructure; and
•
the ongoing costs of operating as a public company.
Until such time, if ever, as we can generate substantial product revenue to support our cost structure, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations and other similar
22
--------------------------------------------------------------------------------
arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our shareholders 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 drug candidates or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. If we are unable to raise additional funds 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 drug candidates even if we would otherwise prefer to develop and market such drug candidates ourselves.
Cash flows
The following table summarizes our cash flows for each of the periods presented:
Nine Months Ended
September 30,
(in thousands) 2022 2021
Net cash used in operating activities $ (35,615 ) $ (26,415 )
Net cash used in investing activities (312 ) (686 )
Net cash provided by financing activities 95 215,985
Net (decrease) increase in cash, cash equivalents and
restricted cash $ (35,832 ) $ 188,884
Operating activities
Net cash used in operating activities for the nine months ended
•
an increase in net loss of
•
a decrease in the net change in our net operating assets and liabilities of
•
offset by an increase in non-cash charges of
Investing activities
Net cash used in investing activities was
Financing activities
Net cash provided by financing activities was
Net cash provided by financing activities was
Critical accounting estimates
Our management's discussion and analysis of financial condition and results of
operations is based on our consolidated financial statements, which have been
prepared in accordance with generally accepted accounting principles in
23
--------------------------------------------------------------------------------
We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
There have been no significant changes to our critical accounting policies from
those described in "Management's Discussion and Analysis of Financial Condition
and Results of Operations," included in our Annual Report on Form 10-K for the
year ended
Emerging growth company status
We are an "emerging growth company", or EGC, under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. Section 107 of the JOBS Act provides that an EGC can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards. Thus, an EGC can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of delayed adoption of new or revised accounting standards and, therefore, we will be subject to the same requirements to adopt new or revised accounting standards as private entities.
As an EGC, we may, and intend to, take advantage of certain exemptions and reduced reporting requirements under the JOBS Act. Subject to certain conditions, as an EGC:
•
we may present only two years of audited financial statements and only two years of related Management's Discussion and Analysis of Financial Condition and Results of Operations;
•
we may avail ourselves of the exemption from providing an auditor's attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;
•
we may avail ourselves of the exemption from complying with any requirement that
may be adopted by the
•
we may provide reduced disclosure about our executive compensation arrangements; and
•
we may not require nonbinding advisory votes on executive compensation or stockholder approval of any golden parachute payments.
We will remain an EGC until the earliest of (i) the last day of the fiscal year
following the fifth anniversary of the completion of our initial public
offering, (ii) the last day of the fiscal year in which we have total annual
gross revenues of
We are also a "smaller reporting company," meaning that the market value of our
stock held by non-affiliates plus the aggregate amount of gross proceeds to us
as a result of the initial public offering is less than
24
--------------------------------------------------------------------------------
© Edgar Online, source
