pmvp-10q_20210331.htm

 

 

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, 2021

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: 001-39539

 

PMV PHARMACEUTICALS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

46-3218129

(State or other jurisdiction of

incorporation or organization)

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

8 Clarke Drive, Suite 3

Cranbury, NJ

08512

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code: (609) 642-6670

 

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 $0.00001

 

PMVP

 

The Nasdaq Global Select 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  

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.     Yes      No  

As of May 12, 2021, the registrant had 45,033,422 shares of common stock, $0.00001 par value per share, outstanding.

 

 

 

 


 

 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

1

Item 1.

Condensed Financial Statements (Unaudited)

1

 

Condensed Balance Sheets (Unaudited)

1

 

Condensed Statements of Operations and Comprehensive Loss (Unaudited)

2

 

Condensed Statements of Convertible Preferred Stock and Stockholders’ (Deficit) Equity (Unaudited)

3

 

Condensed Statements of Cash Flows (Unaudited)

4

 

Notes to Unaudited Condensed Financial Statements

5

Item 2.

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

14

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

21

Item 3.

Defaults Upon Senior Securities

21

Item 4.

Mine Safety Disclosures

21

Item 5.

Other Information

21

Item 6.

Exhibits

22

Signatures

24

 


i


 

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements other than statements of historical facts contained in this Quarterly Report on Form10-Q, including statements regarding our future results of operations and financial position, business strategy, development plans, planned preclinical studies and clinical trials, future results of clinical trials, expected research and development costs, regulatory strategy, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

 

 

our financial performance;

 

the sufficiency of our existing cash, cash equivalents and short-term marketable securities to fund our future operating expenses and capital expenditure requirements;

 

our need to raise additional funding before we can expect to generate any revenues from product sales;

 

our ability to obtain additional funding for our operations, when needed, including funding necessary to complete further development and commercialization of our product candidates, if approved;

 

the accuracy of our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

 

the implementation of our strategic plans for our business and product candidates;

 

the size of the market opportunity for our product candidates and our ability to maximize those opportunities;

 

the initiation, timing, progress and results of our research and development programs, preclinical studies, any clinical trials and, investigational new drug application (“IND”) and other regulatory submissions;

 

the beneficial characteristics, safety, efficacy and therapeutic effects of our product candidates;

 

our estimates of the number of patients expected to have certain p53 mutants and the number of patients that will enroll in our clinical trials;

 

the ability of our clinical trials to demonstrate safety and efficacy of our product candidates, and other favorable results;

 

our plans relating to the clinical development of our product candidates, including the disease areas to be evaluated;

 

the timing, progress and focus of our clinical trials, and the reporting of data from those trials;

 

our ability to obtain and maintain regulatory approval of our product candidates;

 

our plans relating to commercializing our product candidates, if approved;

 

the expected benefits of potential future strategic collaborations with third parties and our ability to attract collaborators with development, regulatory and commercialization expertise;

 

the success of competing therapies that are or may become available;

 

the timing or likelihood of regulatory filings and approvals, including our expectation to seek accelerated reviews or special designations, such as breakthrough therapy and orphan drug designation, for our product candidates;

 

our plans relating to the further development and manufacturing of our product candidates, including for additional indications that we may pursue;

 

existing regulations and regulatory developments in the United States and other jurisdictions;

 

our plans and ability to obtain or protect intellectual property rights, including extensions of existing patent terms where available;

 

our plan to rely on third parties to conduct and support preclinical and clinical development;

 

our ability to retain the continued service of our key personnel and to identify, hire and then retain additional qualified personnel;

 

the impact of the ongoing COVID-19 pandemic or other related disruptions on our business; and

ii


 

 

 

our expectations regarding the period during which we will qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012, as amended.

 

We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we believe may affect our business, financial condition, results of operations and prospects, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions described in the section titled “Item 1A. Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2020 as well as in this Quarterly Report on Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise.

 

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

 

iii


 

 

PART I—FINANCIAL INFORMATION

Item 1. Condensed Financial Statements (Unaudited).

PMV Pharmaceuticals, Inc.

Condensed Balance Sheets

(unaudited)

(in thousands, except share and per share amounts)

 

 

 

March 31,

2021

(unaudited)

 

 

December 31,

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

208,783

 

 

$

361,422

 

Marketable securities, current

 

 

122,706

 

 

 

 

Prepaid expenses and other current assets

 

 

3,464

 

 

 

3,339

 

Total current assets

 

 

334,953

 

 

 

364,761

 

Property and equipment, net

 

 

697

 

 

 

569

 

Marketable securities, noncurrent

 

 

16,891

 

 

 

 

Right-of-use assets, operating leases

 

 

828

 

 

 

 

Other assets

 

 

1,024

 

 

 

201

 

Total assets

 

$

354,393

 

 

$

365,531

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,252

 

 

$

1,607

 

Accrued expenses

 

 

3,878

 

 

 

4,803

 

Operating lease liability, current

 

 

666

 

 

 

 

Total current liabilities

 

 

5,796

 

 

 

6,410

 

Operating lease liability, noncurrent

 

 

302

 

 

 

 

Total liabilities

 

 

6,098

 

 

 

6,410

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.00001 par value, 5,000,000 shares authorized at March 31, 2021 (unaudited) and December 31, 2020.  No shares issued or outstanding at March 31, 2021 (unaudited) and December 31, 2020.

 

 

 

 

 

 

Common stock, $0.00001 par value, 1,000,000,000 shares authorized; 44,881,169 and 44,777,818 shares issued and outstanding at March 31, 2021 (unaudited) and December 31, 2020, respectively

 

 

 

 

 

 

Additional paid-in capital

 

 

469,790

 

 

 

469,001

 

Accumulated deficit

 

 

(121,482

)

 

 

(109,880

)

Accumulated other comprehensive loss

 

 

(13

)

 

 

 

Total stockholders’ equity

 

 

348,295

 

 

 

359,121

 

Total liabilities and stockholders’ equity

 

$

354,393

 

 

$

365,531

 

 

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

1


 

PMV Pharmaceuticals, Inc.

Condensed Statements of Operations and Comprehensive Loss

(unaudited)

(in thousands, except share and per share amounts)

 

 

Three Months Ended March 31,

 

 

2021

 

 

2020

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

$

7,500

 

 

$

5,955

 

General and administrative

 

4,174

 

 

 

1,699

 

Total operating expenses

 

11,674

 

 

 

7,654

 

Loss from operations

 

(11,674

)

 

 

(7,654

)

Other income (expense):

 

 

 

 

 

 

 

Interest income, net

 

128

 

 

 

406

 

Other expense

 

(52

)

 

 

(5

)

Total other income

 

76

 

 

 

401

 

Loss before provision for income taxes

 

(11,598

)

 

 

(7,253

)

Provision for income taxes

 

4

 

 

 

2

 

Net loss

 

(11,602

)

 

 

(7,255

)

Unrealized losses on marketable securities, net of tax

 

(13

)

 

 

(80

)

Comprehensive loss

$

(11,615

)

 

$

(7,335

)

 

 

 

 

 

 

 

 

Net loss per share -- basic and diluted

$

(0.26

)

 

$

(2.38

)

Weighted-average common shares outstanding

 

44,785,226

 

 

 

3,046,200

 

 

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

 

2


 

 

PMV Pharmaceuticals, Inc.

Condensed Statements of Convertible Preferred Stock and Stockholders’ (Deficit) Equity

(unaudited)

(in thousands, except share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Total

 

 

 

Convertible

Preferred Stock

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Other

Comprehensive

 

 

Accumulated

 

 

Stockholders'

(Deficit)

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2019

 

 

22,866,246

 

 

$

168,933

 

 

 

 

3,046,200

 

 

$

 

 

 

4,969

 

 

$

(3

)

 

$

(75,440

)

 

$

(70,474

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

296

 

 

 

 

 

 

 

 

 

296

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,255

)

 

 

(7,255

)

Unrealized loss on available for sale investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(80

)

 

 

 

 

 

(80

)

Balance at March 31, 2020

 

 

22,866,246

 

 

$

168,933

 

 

 

 

3,046,200

 

 

$

 

 

 

5,265

 

 

$

(83

)

 

$

(82,695

)

 

$

(77,513

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Total

 

 

 

Convertible

Preferred Stock

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Other

Comprehensive

 

 

Accumulated

 

 

Stockholders'

(Deficit)

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2020

 

 

 

 

$

 

 

 

 

44,777,818

 

 

$

 

 

 

469,001

 

 

$

 

 

$

(109,880

)

 

$

359,121

 

Exercise of stock options

 

 

 

 

 

 

 

 

 

 

 

103,351

 

 

 

 

 

 

 

162

 

 

 

 

 

 

 

 

 

 

$

162

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

627

 

 

 

 

 

 

 

 

 

627

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,602

)

 

 

(11,602

)

Unrealized loss on available for sale investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13

)

 

 

 

 

 

(13

)

Balance at March 31, 2021

 

 

 

 

$

 

 

 

 

44,881,169

 

 

$

 

 

 

469,790

 

 

$

(13

)

 

$

(121,482

)

 

$

348,295

 

 

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

 

3


 

 

PMV Pharmaceuticals, Inc.

Condensed Statements of Cash Flows

(unaudited)

(in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(11,602

)

 

$

(7,255

)

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

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

627

 

 

 

296

 

Depreciation

 

 

79

 

 

 

94

 

Amortization of premiums on marketable securities

 

 

167

 

 

 

87

 

Other

 

 

 

 

 

5

 

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

(948

)

 

 

(24

)

Accounts payable

 

 

(355

)

 

 

(1,255

)

Accrued expenses

 

 

(872

)

 

 

(86

)

Net cash used in operating activities

 

 

(12,904

)

 

 

(8,138

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(120

)

 

 

(51

)

Purchase of marketable securities

 

 

(139,777

)

 

 

(14,828

)

Maturities of marketable securities

 

 

 

 

 

8,495

 

Net cash used in investing activities

 

 

(139,897

)

 

 

(6,384

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from exercise of stock options

 

 

162

 

 

 

 

Net cash provided by financing activities

 

 

162

 

 

 

 

Net decrease in cash and cash equivalents

 

 

(152,639

)

 

 

(14,522

)

Cash and cash equivalents

 

 

 

 

 

 

 

 

Cash and cash equivalents - beginning of period

 

 

361,422

 

 

 

73,278

 

Cash and cash equivalents - end of period

 

$

208,783

 

 

$

58,756

 

Supplemental disclosures of cash flow information

 

 

 

 

 

 

 

 

Cash paid for income tax

 

$

4

 

 

$

2

 

 

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

 

4


 

 

PMV Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(unaudited)

(in thousands, except share and per share amounts)

1. Formation and Business of the Company

Organization and Liquidity

PMV Pharmaceuticals, Inc. (the “Company”) was incorporated in the state of Delaware in March 2013. Since inception, the Company has devoted substantially all of its time and efforts to performing research and development activities and raising capital. The Company is a precision oncology company pioneering the discovery and development of small molecule, tumor-agnostic therapies targeting p53 mutations. The Company’s headquarters are located in Cranbury, New Jersey.

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry including, but not limited to, technical risks associated with the successful research, development and manufacturing of product candidates, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Current and future programs will require significant research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

On September 25, 2020, the Company completed an initial public offering (the “IPO”) of 13,529,750 shares of common stock, at a public offering price of $18.00 per share including the exercise in full by the underwriters of their option to purchase up to 1,764,750 additional shares of commons stock, for aggregate gross proceeds of $243,536 and its shares started trading on The Nasdaq Global Select Market under the ticker symbol “PMVP.”  The Company received $223,161 in net proceeds after deducting underwriting discounts and commissions and other offering expenses payable by the Company.  In connection with the closing of the IPO, all of the Company’s outstanding shares of convertible preferred stock outstanding at the time of the IPO automatically converted into 28,188,110 shares of common stock. On September 18, 2020, the Company amended its certificate of incorporation to effect a 5.2651-for-1 reverse stock split of its issued and outstanding common and convertible preferred stock. The accompanying unaudited condensed financial statements and related notes give retroactive effect to the reverse stock split for all periods presented.

The Company has incurred net losses and negative cash flows from operations since its inception. During the three months ended March 31, 2021, the Company incurred a net loss of $11,602 and used $12,904 of cash for operations. At March 31, 2021, the Company had an accumulated deficit of $121,482. Cash and cash equivalents at March 31, 2021 were $208,783.  Short and long term marketable securities totaled $139,597 at March 31, 2021. Management expects to incur substantial additional operating losses for the next several years and will need to obtain additional debt or equity financings in order to complete development of its products, obtain regulatory approvals, launch and commercialize its products and continue research and development programs. The Company believes it has adequate cash and cash equivalents to operate for at least the next twelve months from the date of issuance of these unaudited condensed financial statements.

2. Summary of Significant Accounting Policies

The Company’s significant accounting policies are disclosed in the audited financial statements for the year ended December 31, 2020, included in the Company’s Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (“SEC”) on March 3, 2021. Since the date of those financial statements, there have been no changes to its significant accounting policies except as noted below.

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the interim period reporting requirements of Form 10-Q and Article 10 of Regulation S-X. The condensed balance sheet as of March 31, 2021, the condensed statements of operations and comprehensive loss, and condensed statements of convertible preferred stock and stockholders’ (deficit) equity for the three months ended March 31, 2021 and 2020, and the condensed statements of cash flows for the three months ended March 31, 2021 and 2020 are unaudited, but, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, which we consider necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.  The results for any interim period are not

5


PMV Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(unaudited)

(in thousands, except share and per share amounts)

 

necessarily indicative of results for the year ending December 31, 2021 or for any other subsequent interim period.  The condensed balance sheet at December 31, 2020 has been derived from our audited financial statements.

Use of Estimates

The preparation of financial statements in conformity with GAAP 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 reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, the fair values of common stock, convertible preferred stock and stock-based compensation. Actual results could differ materially from those estimates.

Reverse Stock Split

In September 2020, the Company’s board of directors and stockholders approved an amendment to the Company’s amended and restated certificate of incorporation to effect a 5.2651-for-1 reverse stock split of the Company’s common stock and convertible preferred stock, which was effected on September 18, 2020. The par value of the common stock and convertible preferred stock were not adjusted as a result of the reverse stock split. Accordingly, all common stock, convertible preferred stock, stock options, and related per share amounts in these unaudited condensed financial statements have been retroactively adjusted for all periods presented to give effect to the reverse stock split.

Cash, Cash Equivalents and Marketable Securities

Management considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

The Company’s marketable debt securities have been classified and accounted for as available-for-sale. The Company classifies its marketable debt securities as either short-term or long-term based on each instrument’s underlying contractual maturity date. Marketable debt securities with maturities of 12 months or less are classified as short-term and marketable debt securities with maturities greater than 12 months are classified as long-term. The Company’s marketable debt securities are carried at fair value, with unrealized gains and losses, net of taxes, reported as a component of accumulated other comprehensive loss in stockholders’ deficit. Premiums and discounts on marketable debt securities are amortized into earnings over the life of the security. For the three months ended March 31, 2021 and 2020, the Company recorded $167 and $87 of amortization, respectively.      

Comprehensive Loss

The Company presents comprehensive loss in a single statement within its financial statements.  Other comprehensive loss consists of unrealized gains and losses on marketable securities, net of tax.

 

Leases

 

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the circumstances present. The Company accounts for a contract as a lease when it has the right to control the asset for a period of time while obtaining substantially all of the asset’s economic benefits. The Company determines the initial classification and measurement of its operating right-of-use (“ROU”) assets and operating lease liabilities at the lease commencement date, and thereafter if modified. The lease term includes any renewal options that the Company is reasonably assured to exercise. The Company’s policy is to not record leases with a lease term of 12 months or less on its balance sheets. The Company’s only existing lease is for office space.

The ROU asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease. The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, the Company uses its estimated secured incremental borrowing rate for that lease term.

6


PMV Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(unaudited)

(in thousands, except share and per share amounts)

 

Lease expense for operating leases is recognized on a straight-line basis over the reasonably assured lease term based on the total lease payments and is included in operating expense in the statements of operations.

 

Payments due under each lease agreement include fixed and variable payments. Variable payments relate to the Company’s share of the lessor’s operating costs associated with the underlying asset and are recognized when the event on which those payments are assessed occurs. Neither of the Company’s leases contain residual value guarantees.

 

The interest rate implicit in lease agreements is typically not readily determinable, and as such, the Company utilizes the incremental borrowing rate to calculate lease liabilities, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

Recently Issued and Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842), as amended by multiple standards updates, in order to increase transparency and comparability among organizations by requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The most significant change arising from the new standard is the recognition of right of use assets and lease liabilities for leases classified as operating leases. The right-of-use lease liability for operating leases is based on the net present value of future minimum lease payments. Additionally, the right-of-use asset for operating leases is based on the lease liability adjusted for the reclassification of certain balance sheet amounts such as the long term portion of straight line rent liability and deferred lease incentives. Under the standard, disclosures are required to enable financial statement users to assess the amount, timing, and uncertainty of cash flows arising from the leases. Companies are also required to recognize and measure leases existing at, or entered into after, the adoption date using a modified retrospective approach, with certain practical expedients available. Comparative periods prior to adoption have not been retrospectively adjusted.

 

The Company adopted the standard effective January 1, 2021 using the modified retrospective transition method. Upon adoption, the Company applied the package of practical expedients that allows an entity to not reassess (i) whether any expired or existing contracts are or contain leases, (ii) lease classification for any expired or existing leases and (iii) initial direct costs for any expired or existing leases. The Company elected the practical expedient not to apply the recognition requirements to short-term leases, defined as a lease that at the commencement date has a lease term of 12 months or less that does not include a purchase option to purchase the underlying asset that the Company is reasonably certain to exercise. Furthermore, the Company has elected the practical expedient to not separate lease and non-lease components by class of underlying asset for its existing leases. As the Company enters into new leases, it will continue to evaluate this accounting policy for any new classes of underlying assets.

 

Upon adoption, the Company recorded ROU assets of $970 and lease liabilities of $1,129. The standard did not have a material impact on the statement of operations or statement of cash flows.

 

In December 2019, the FASB issued ASU 2019-12, Income Taxes – Simplifying the Accounting for Income Taxes. The new guidance simplifies the accounting for income taxes by removing several exceptions in the current standard and adding guidance to reduce complexity in certain areas, such as requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. The Company adopted this standard as of January 1, 2021. The adoption did not have a material impact on the Company’s financial statements.

Concentration of Credit Risk and Other Risks and Uncertainties

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist of cash and cash equivalents and marketable securities. Cash and cash equivalents includes a checking account held at one financial institution. At times, such deposits may be in excess of insured limits. The Company has not experienced any losses on its deposits of cash and cash equivalents. The Company’s marketable debt securities are carried at fair value and include any unrealized gains and losses. Any investments with unrealized losses are considered to be temporarily impaired.

The Company’s future results of operations involve a number of risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, rapid technological change, uncertainty of market acceptance of the product, competition from substitute products and larger companies, protection of proprietary technology, any future strategic relationships and dependence on key individuals.

7


PMV Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(unaudited)

(in thousands, except share and per share amounts)

 

Products developed by the Company require clearances from the U.S. Food and Drug Administration or other international regulatory agencies prior to commercial sales. There can be no assurance the Company’s product candidates will receive the necessary clearances. If the Company is denied clearance, clearance is delayed or it is unable to maintain clearance, it could have a materially adverse impact on the Company.

In January 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a “Public Health Emergency of International Concern,” which continues to spread throughout the world.  The outbreak has adversely impacted global commercial activity and contributed to significant volatility in financial markets. The COVID-19 outbreak and government responses are creating disruption in global supply chains and adversely impacting many industries. The outbreak could have a continued material adverse impact on economic and market conditions and trigger a period of global economic slowdown. The Company continues to monitor the impact of the COVID-19 outbreak closely. The full extent to which the COVID-19 outbreak will impact its operations or financial results remains uncertain.

3. Fair Value Measurements

The Company’s financial assets consist of money market funds, U.S. government debt securities and corporate debt securities. The following tables show the Company’s cash equivalents and available-for-sale securities’ carrying amounts and fair values at March 31, 2021 and December 31, 2020:

 

 

 

As of March 31, 2021 (unaudited)

 

 

 

Carrying

Amount

 

 

Fair Value

 

 

Quoted

priced in

active

markets

(level 1)

 

 

Significant

other

observable

inputs

(level 2)

 

 

Significant

unobservable

inputs

(level 3)

 

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

41,268

 

 

$

41,268

 

 

$

41,268

 

 

$

 

 

$

 

Corporate securities

 

 

280,534

 

 

 

280,534

 

 

 

 

 

 

280,534

 

 

 

 

Government securities

 

 

25,562

 

 

 

25,562

 

 

 

 

 

 

25,562

 

 

 

 

Total financial assets

 

$

347,364

 

 

$

347,364

 

 

$

41,268

 

 

$

306,096

 

 

$

 

 

 

 

As of December 31, 2020

 

 

 

Carrying

Amount

 

 

Fair

Value

 

 

Quoted

Priced in

Active

Markets

(Level 1)

 

 

Significant

Other

Observable

Inputs

(Level 2)

 

 

Significant

Unobservable

Inputs

(Level 3)

 

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

 

240,033

 

 

 

240,033

 

 

 

240,033

 

 

$

 

 

$

 

Corporate securities

 

 

120,008

 

 

 

120,008

 

 

 

 

 

 

120,008

 

 

 

 

Total financial assets

 

$

360,041

 

 

$

360,041

 

 

$

240,033

 

 

$

120,008

 

 

$

 

 

Cash Equivalents — Cash equivalents of $207.8 million as of March 31, 2021 consisted of money market funds of $41.3 million and corporate debt securities of $166.5 million. Cash equivalents of $360.0 million as of December 31, 2020 consisted of money market funds of $240.0 million and corporate debt securities of $120.0 million. Money market funds are classified within level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets, whereas corporate debt securities are classified within level 2 of the fair value hierarchy because they are valued using inputs other than quoted prices that are observable for the asset or liability either directly or indirectly.

Marketable Securities —  There were $122.7 million current marketable securities and $16.9 million noncurrent marketable securities as of March 31, 2021.  There were no marketable securities as of December 31, 2020.

 

8


PMV Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(unaudited)

(in thousands, except share and per share amounts)

 

 

4. Property and Equipment, Net

 

 

 

March 31,

2021

(unaudited)

 

 

December 31,

2020

 

Machinery & equipment

 

$

2,061

 

 

$

1,989

 

Computers

 

 

8

 

 

 

8

 

Furniture & fixtures

 

 

9

 

 

 

9

 

Leasehold improvements

 

 

161

 

 

 

73

 

Assets not placed in service

 

 

99

 

 

 

51

 

Total property and equipment

 

 

2,338

 

 

 

2,130

 

Less: Accumulated depreciation

 

 

(1,641

)

 

 

(1,561

)

Property and equipment, net

 

$

697

 

 

$

569

 

 

Depreciation expense for the three months ended March 31, 2021 and 2020 was $79 and $94, respectively.  

5. Accrued Expenses

Accrued expenses consist of the following:

 

 

 

March 31,

2021

(unaudited)

 

 

December 31,

2020

 

Accrued compensation

 

$

1,814

 

 

$

3,109

 

Accrued legal and professional services

 

 

205

 

 

 

 

Accrued research and development costs

 

 

1,819

 

 

 

1,595

 

Other accrued liabilities

 

 

40

 

 

 

99

 

Total

 

$

3,878

 

 

$

4,803

 

 

6. Commitments and Contingencies

Operating Leases

In June 2015, the Company executed a noncancelable operating lease for approximately 13,000 square feet of laboratory, research and development, and office space in Cranbury, New Jersey for an initial base rent of $20.00 per square foot. This location operates as the Company’s headquarters. In June 2017, the Company obtained an additional noncancelable operating lease for about 6,000 square feet of laboratory space in the same corporate center at an initial rental rate at $22.00 per square foot. As a result of the additional space, both leases will expire July 2022, with an option to renew for an additional five-year term. Both leases include a common area maintenance expense for $3.00 per square foot with an increase of 3% on the first month of each calendar year during the lease term and a management fee of 3% of the base rent. The Company is obligated to pay, on a pro-rata basis, real estate taxes and operating costs related to the premises.

 

In August 2018, the Company executed two noncancelable operating leases. One lease for approximately 6,000 square feet for vivarium, laboratory and general office space in South Brunswick, New Jersey. The initial annual base rent is $15.50 per square foot and a management fee of 3% of the base rent. The Company is obligated to pay, on a pro-rata basis, insurance premiums, real estate taxes and operating costs related to the premises. The lease expires in July 2022, with an option for additional five-year term. The second lease is for office space in Lexington, Massachusetts, that expires August 2023, with an option to renew for a one-time, three-year extension. The initial annual base rent is $28.50 per square foot and will increase $1.00 per square foot at the end of each rent year.

 

The lease agreement in Lexington, Massachusetts allows for a tenant improvement allowance not to exceed $165 to be applied to the total cost of tenant improvements to the leased premises. Tenant improvement allowances due or received are recorded as deferred rent incentives on the Company’s condensed consolidated balance sheets, which are amortized to rent expense over the term of the lease. As of March 31, 2021, deferred rent incentives totaled $88.

 

9


PMV Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(unaudited)

(in thousands, except share and per share amounts)

 

 

The components of lease cost for the three months ended March 31, 2021 are as follows:

 

(in thousands)

Three Months

Ended March

31, 2021

 

Operating lease cost

$

157

 

Variable lease cost

 

95

 

Total lease cost

$

252

 

 

Amounts reported in the consolidated balance sheets for leases where the Company is the lessee as of March 31, 2021 were as follows, in thousands:

 

Operating Leases:

Three Months

Ended March

31, 2021

 

Right-of-use assets, operating leases

$

828

 

 

 

 

 

Operating lease liabilities, current

$

666

 

Operating lease liabilities, non-current

 

302

 

Total operating lease liabilities

$

968

 

 

 

 

 

Weighted-average remaining lease term (years)

1.55

 

Weighted-average discount rate

 

5.75

%

 

Other information related to leases for the three months ended March 31, 2021 is as follows, in thousands:

 

Cash paid for amounts included in the measurement of lease liabilities

$

174

 

Leased assets obtained in exchange for new operating lease liabilities

 

 

 

Minimum lease payments under operation leases by fiscal year were as follows, in thousands:

 

Fiscal year

Year Ended

December

31, 2020

 

2021

$

525

 

2022

 

413

 

2023

 

71

 

2024

 

 

2025

 

 

Thereafter

 

 

Total minimum lease payments

$

1,009

 

Less:  Amounts representing imputed interest

 

(41

)

Present value of lease liabilities

$

968

 

 

 

(1)

Excluded from the table above are the lease payments associated with the lease of office and laboratory space in Princeton, New Jersey for the Company’s future headquarters. The Company has excluded its lease payments due to the commencement date not having occurred and a lease liability not yet having been recognized on its condensed balance sheet.

 

Rent expense recorded during the three months ended March 31, 2021 and 2020 was $137 and $186, respectively.

 

In January 2021, the Company signed a lease for 50,581 square feet of office and laboratory space at One Research Way in Princeton, New Jersey. That lease term extends through 2032, has a five-year extension option, and is intended to replace our two existing facilities. Payment under this lease will total $19.6 million through May 2032.  The Company received a tenant improvement allowance of $4.1 million on behalf of the lessor for a buildout of laboratory, vivarium, and office space.

10


PMV Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(unaudited)

(in thousands, except share and per share amounts)

 

Contingencies

From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities.  The Company accrues a liability for such matters when future expenditures are probable and such expenditures can be reasonably estimated.

Commitments

At March 31, 2021, there were no purchase commitments with third-party suppliers.

7. Stockholders’ Equity

The Company is authorized to issue up to 1,000,000,000 shares of common stock with a par value of $0.00001 per share and 5,000,000 shares of preferred stock with a par value of $0.00001 per share. At March 31, 2021 and December 31, 2020, there were 44,881,169 and 44,777,818 shares of common stock issued and outstanding, respectively, and no shares of preferred stock issued and outstanding.

Common stockholders are entitled to receive dividends if and when declared by the board of directors subject to the rights of any preferred stockholders.  As of March 31, 2021, no dividends on common stock had been declared by the Company.

 

8. Stock Plan

2020 Equity Incentive Plan

The 2020 Equity Incentive Plan (the “2020 Plan”) was approved by the board of directors on September 24, 2020.  The 2020 Plan provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock units, restricted stock awards, unrestricted stock awards, cash-based awards and dividend equivalent rights to the Company’s officers, employees, directors and consultants. The number of shares initially reserved for issuance under the 2020 Plan is 4,406,374, which shall be, upon approval by the board of directors, cumulatively increased on January 1, 2021 and each January 1 thereafter by 5% of the number of shares of the Company’s common stock outstanding on the immediately preceding December 31.  As of March 31, 2021, there were 4,367,896 shares available for issuance under the 2020 Plan.

2020 Employee Stock Purchase Plan

The 2020 Employee Stock Purchase Plan (the “2020 ESPP”) was approved by the board of directors on September 24, 2020.  A total of 400,572 shares of common stock were initially reserved for issuance under this plan, which shall be increased, upon approval by the board of directors, on January 1, 2021 to the lesser of (i) 801,504 shares of common stock, (ii) 1% of the outstanding shares of common stock on the last day of the immediately preceding fiscal year, or (iii) an amount determined by the Administrator no later than the last day of the immediately preceding fiscal year.  As of March 31, 2021, no shares are issued or outstanding under the 2020 ESPP.

2013 Equity Incentive Plan

In 2013, the Company adopted the 2013 Stock Plan (the “2013 Plan”). On September 24, 2020, this plan was replaced by the 2020 Plan, and future issuances of incentive instruments will be governed by that plan.  Subject to the provisions of the 2020 Plan, the Company had the option to either forfeit or repurchase remaining shares under the 2013 Equity Incentive Plan on or after the registration date.  The Company chose to forfeit the remaining shares.

11


PMV Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(unaudited)

(in thousands, except share and per share amounts)

 

Stock-Based Compensation

 

This table summarizes option activity for the three-month period ended March 31, 2021:

 

 

 

 

 

 

 

Options Outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

Average

 

 

Aggregate

 

 

 

Shares

 

 

 

 

 

 

Average

 

 

Remaining

 

 

Intrinsic

 

 

 

Available

 

 

Number of

 

 

Exercise

 

 

Contractual Life

 

 

Value

 

 

 

for Grant

 

 

Options

 

 

Price

 

 

(in years)

 

 

(in 000s)

 

Balances, December 31, 2020

 

 

4,609,725

 

 

 

4,090,970

 

 

$

3.14

 

 

 

7.13

 

 

$

238,792

 

Options retired under 2013 Equity Plan

 

 

(237,542

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options granted

 

 

(23,500

)

 

 

23,500

 

 

$

34.30

 

 

 

 

 

 

 

 

 

Options forfeited / cancelled

 

 

19,213

 

 

 

(19,213

)

 

$

3.86

 

 

 

0.00

 

 

 

 

 

Options exercised

 

 

 

 

 

(103,351

)

 

$

1.57

 

 

 

 

 

 

 

 

 

Balances, March 31, 2021 (unaudited)

 

 

4,367,896

 

 

 

3,991,906

 

 

$

3.36

 

 

 

6.77

 

 

$

117,965

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vested and expected to vest

 

 

 

 

 

 

3,991,906

 

 

$

3.34

 

 

 

6.77

 

 

$

117,965

 

Exercisable

 

 

 

 

 

 

2,644,954

 

 

$

2.20

 

 

 

5.81

 

 

$

81,134

 

 

At March 31, 2021, the total compensation cost related to nonvested awards not yet recognized is $4,683. The weighted-average period over which the nonvested awards is expected to be recognized is 3.0 years.

The Company estimated the fair value of the options using the Black-Scholes options valuation model. The fair value of the options is being amortized on a straight-line basis over the requisite service period of the awards. The fair value was estimated using the following assumptions:

 

 

Three Months Ended

 

 

Year Ended

 

 

March 31,

 

 

December 31,

 

 

2021

 

 

2020

 

Risk-free interest rate

0.65%

 

 

0.31% - 1.51%

 

Expected life (in years)

6.25

 

 

4.92 - 6.40

 

Dividend yield

0%

 

 

0%

 

Expected volatility

79.90%

 

 

70.70% - 77.60%

 

 

Expected Term: The Company uses the simplified method to calculate expected term described in the SEC’s Staff Accounting Bulletin No. 107, which takes into account vesting term and expiration date of the options.

Volatility: Volatility is based on an average of the historical volatilities of comparable publicly traded companies for the expected term.

Risk Free Interest Rate: The risk-free rate is based on the U.S. Treasury yields in effect at the time of grant for periods corresponding with the expected term of the option.

Dividend Yield: The Company has never declared or paid any cash dividends and does not plan to pay cash dividends in the foreseeable future, and therefore, used an expected dividend yield of zero in the valuation model.

Stock-based compensation expense recorded under ASC 718 related to stock options granted was allocated to research and development and general and administrative expense as follows:

 

 

For the Three Months Ended

 

 

March 31,

 

 

March 31,

 

 

2021

 

 

2020

 

Research and development

$

251

 

 

$

142

 

General and administrative

 

376

 

 

 

154

 

Total stock-based compensation

$

627

 

 

$

296

 

12


PMV Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(unaudited)

(in thousands, except share and per share amounts)

 

 

 

9. Income Taxes

During the three months ended March 31, 2021 and 2020, the Company recorded a full valuation allowance on federal and state deferred tax assets since management does not forecast the Company to be in a taxable position in the near future.

10. Net Loss per Share

 

The Company’s convertible preferred stock does not participate in losses.

 

 

For the Three Months Ended

 

 

March 31,

2021

(unaudited)

 

 

March 31,

2020

(unaudited)

 

Net loss

$

(11,602

)

 

$

(7,255

)

Weighted-average number of shares - basic and diluted

 

44,785,226

 

 

 

3,046,200

 

Net loss per share - basic and diluted

 

(0.26

)

 

 

(2.38

)

 

11. Related Parties

The Company has consulting agreements with two members of the board of directors. Consulting fees paid in each of the three months ended March 31, 2021 and 2020 were $28.  There were no amounts owed under the consulting agreement at March 31, 2021 or December 31, 2020.

During the fiscal year ended December 31, 2020, an investor provided $65 of financial consulting services to the Company. The Company has paid the entirety of the fees as of December 31, 2020.  No amounts were paid or owed to the investors in the three months ended March 31, 2021.  

 

 

 

13


 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion of our financial condition and results of operations in conjunction with our unaudited financial statements and the related notes and other financial information included in this Quarterly Report on Form 10-Q and our audited financial statements and notes thereto as of and for the years ended December 31, 2020 and 2019 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, including Contractual Obligations and Critical Accounting Policies and Significant Judgments and Estimates, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the Securities and Exchange Commission (SEC) on March 3, 2021.  Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “we,” “us,” and “our” refer to PMV Pharmaceuticals, Inc.

In addition to historical information, this Quarterly Report on Form 10-Q contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including but not limited to those set forth under the captions “Special Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors” and elsewhere in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as updated by our subsequent filings under the Securities Exchange Act of 1934, as amended. Furthermore, past operating results are not necessarily indicative of results that may occur in future periods.

Overview

We are a precision oncology company pioneering the discovery and development of small molecule, tumor-agnostic therapies targeting p53 mutations. p53 is a well-defined tumor suppressor protein known as the “guardian of the genome,” and normal, or wild-type, p53 has the ability to eliminate cancer cells. However, mutant p53 proteins can be misfolded and lose their wild-type tumor suppressing function. These p53 mutations are found in approximately half of all cancers. The field of p53 biology was established by our co-founder Dr. Arnold Levine when he discovered the p53 protein in 1979. We have leveraged more than four decades of research experience and developed unique insights into p53 to create a precision oncology platform designed to generate selective, small molecule, tumor-agnostic therapies that structurally correct specific mutant p53 proteins to restore their wild-type function. We are deploying our precision oncology platform to target the top ten most frequent, or hotspot, p53 mutations that are collectively associated with approximately 10-15% of all cancers.

Since our formation in March 2013, we have devoted substantially all of our time and efforts to performing research and development activities and raising capital. We are not profitable and have incurred losses in each year since our inception. Our net losses were $34.4 million and $25.3 million for the years ended December 31, 2020 and 2019, respectively, and $11.6 million and $7.3 million for the three months ended March 31, 2021 and 2020, respectively. As of March 31, 2021, we had an accumulated deficit of $121.5 million. We do not currently have any product candidates approved for sale, and we continue to incur significant research and development and general administrative expenses related to our operations. We initiated a Phase 1/2 clinical trial in October 2020 for our lead product candidate, PC14586. In October 2020, we were granted FDA Fast Track Designation of PC14586 for the treatment of patients with locally advanced or metastatic solid tumors that have a p53 Y220C mutation. We dosed our first patient in this clinical trial in the fourth quarter of 2020. We expect that our operating expenses will increase significantly as we advance our product candidates through preclinical and clinical development, seek regulatory approval and prepare for and, if approved, proceed to commercialization; acquire, discover, validate and develop additional product candidates; obtain, maintain, protect and enforce our intellectual property portfolio; and hire additional personnel. In addition, we have incurred, and will continue to incur additional costs associated with operating as a public company, and expect to continue to incur significant losses for the foreseeable future.

Our ability to generate product revenue will depend on the successful development, regulatory approval and eventual commercialization of one or more of our product candidates. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through private or public equity or debt financings, collaborative or other arrangements with corporate sources, or through other sources of financing. Adequate funding may not be available to us on acceptable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, scale back or discontinue the development and commercialization of our product candidates.

We plan to continue to use third-party service providers, including clinical research organizations, or CROs, and contract manufacturing organization, or CMOs, to carry out our preclinical and clinical development and to manufacture and supply the materials to be used during the development and commercialization of our product candidates. We do not currently have a sales force.

14


 

Components of Results of Operations

Revenue

To date, we have not generated any revenue from any sources, including from product sales, and we do not expect to generate any revenue from the sale of products in the foreseeable future. If our development efforts for our product candidates are successful and result in regulatory approval, or license agreements with third parties, we may generate revenue in the future from product sales. However, there can be no assurance as to when we will generate such revenue, if at all.

Operating Expenses

Research and Development Expenses

Our research and development expenses consist primarily of costs incurred to conduct research, such as the discovery and development of our product candidates as well as the development of future product candidates. Research and development expenses include personnel costs, including stock-based compensation expense, third-party contractor services, laboratory materials and supplies, sourcing of raw materials and manufacturing of product candidates, depreciation and maintenance of research equipment and an allocation of related facilities costs. We expense research and development costs as they are incurred.

As we are at a very early stage of development, we do not allocate our costs by product candidate or development program, as a significant amount of research and development expenses include compensation costs, materials, supplies, depreciation on and maintenance of research equipment, and the cost of services provided by outside contractors, which are not tracked by product candidate or development program. In particular, with respect to internal costs, several of our departments support multiple product candidate research and development programs, and therefore the costs cannot be allocated to a particular product candidate or development program. Substantially all of our research and development costs are associated with our lead product candidate, PC14586. In October 2020, we initiated a Phase 1/2 clinical trial for PC14586 and also were granted FDA Fast Track Designation of PC14586 for the treatment of patients with locally advanced or metastatic solid tumors that have a p53 Y220C mutation. We dosed our first patient in this clinical trial in the fourth quarter of 2020.

We expect our research and development expenses to increase substantially in absolute dollars in the future as we advance our product candidates into and through clinical trials and pursue regulatory approval of our product candidates. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming. The actual probability of success for our product candidates may be affected by a variety of factors including: the safety and efficacy of our product candidates, early clinical data, investment in our clinical program, the ability of any future collaborators to successfully develop our licensed product candidates, competition, manufacturing capability, and commercial viability. We may never succeed in achieving regulatory approval for any of our product candidates. As a result of the uncertainties discussed above, we are unable to determine the duration and completion costs of our research and development projects.

General and Administrative Expenses

General and administrative expenses include personnel costs, expenses for outside professional services and other allocated expenses. Personnel costs consist of salaries, bonuses, benefits and stock-based compensation. Outside professional services consist of legal, accounting and audit services and other consulting fees. Allocated expenses consist of rent expense related to our office and research and development facility. We expect to incur additional expenses as a public company, including expenses related to compliance with the rules and regulations of the SEC, and those of any national securities exchange on which our securities are traded, additional insurance expenses, investor relations activities and other administrative and professional services. We expect to increase our headcount significantly to operate as a public company. We also expect to increase our general and administrative expenses as we advance our product candidates through preclinical research and development, manufacturing, clinical development and commercialization.

Interest Income, Net

Interest income, net primarily consists of interest income from our interest-bearing cash, cash equivalents and short-term marketable securities and interest costs related to amortization of premiums and discounts on short-term marketable securities.

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Results of Operations

Comparison of the Three Months ended March 31, 2021 and 2020

The following table summarizes our results of operations (in thousands):

 

 

 

Three Months Ended

March 31,

 

 

 

 

 

Statement of operations data:

 

2021

 

 

2020

 

 

Change

 

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

7,500

 

 

$

5,955

 

 

$

1,545

 

General and administrative

 

 

4,174