pmvp-10q_20210630.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended June 30, 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 August 12, 2021, the registrant had 45,292,015 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

21

Item 4.

Controls and Procedures

21

PART II.

OTHER INFORMATION

22

Item 1.

Legal Proceedings

22

Item 1A.

Risk Factors

22

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

26

Item 3.

Defaults Upon Senior Securities

26

Item 4.

Mine Safety Disclosures

26

Item 5.

Other Information

26

Item 6.

Exhibits

27

Signatures

29

 

 

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;

ii


 

the impact of the ongoing COVID-19 pandemic; including the impact from quarantines, shelter-in-place, executive and similar government orders, on the conduct of business operations or the availability or cost of materials; or

 

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)

 

 

 

June 30,

2021

(unaudited)

 

 

December 31,

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

189,423

 

 

$

361,422

 

Restricted cash

 

 

822

 

 

 

 

Marketable securities, current

 

 

128,926

 

 

 

 

Prepaid expenses and other current assets

 

 

3,909

 

 

 

3,339

 

Total current assets

 

 

323,080

 

 

 

364,761

 

Property and equipment, net

 

 

1,253

 

 

 

569

 

Marketable securities, noncurrent

 

 

20,613

 

 

 

 

Right-of-use assets, operating leases

 

 

10,763

 

 

 

 

Other assets

 

 

201

 

 

 

201

 

Total assets

 

$

355,910

 

 

$

365,531

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

2,369

 

 

$

1,607

 

Accrued expenses

 

 

4,458

 

 

 

4,803

 

Operating lease liability, current

 

 

677

 

 

 

 

Total current liabilities

 

 

7,504

 

 

 

6,410

 

Operating lease liability, noncurrent

 

 

10,559

 

 

 

 

Total liabilities

 

 

18,063

 

 

 

6,410

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.00001 par value, 5,000,000 shares authorized at June 30, 2021 (unaudited) and December 31, 2020.  No shares issued or outstanding at June 30, 2021 (unaudited) and December 31, 2020.

 

 

 

 

 

 

Common stock, $0.00001 par value, 1,000,000,000 shares authorized; 45,213,567 and 44,777,818 shares issued and outstanding at June 30, 2021 (unaudited) and December 31, 2020, respectively.

 

 

 

 

 

 

Additional paid-in capital

 

 

472,196

 

 

 

469,001

 

Accumulated deficit

 

 

(134,356

)

 

 

(109,880

)

Accumulated other comprehensive loss

 

 

7

 

 

 

 

Total stockholders’ equity

 

 

337,847

 

 

 

359,121

 

Total liabilities and stockholders’ equity

 

$

355,910

 

 

$

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 June 30,

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

7,664

 

 

$

5,804

 

 

$

15,163

 

 

$

11,760

 

General and administrative

 

 

5,386

 

 

 

2,281

 

 

 

9,560

 

 

 

3,979

 

Total operating expenses

 

 

13,050

 

 

 

8,085

 

 

 

24,723

 

 

 

15,739

 

Loss from operations

 

 

(13,050

)

 

 

(8,085

)

 

 

(24,723

)

 

 

(15,739

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income, net

 

 

113

 

 

 

157

 

 

 

241

 

 

 

563

 

Other income (expense)

 

 

63

 

 

 

(39

)

 

 

11

 

 

 

(43

)

Total other income

 

 

176

 

 

 

118

 

 

 

252

 

 

 

520

 

Loss before provision for income taxes

 

 

(12,874

)

 

 

(7,967

)

 

 

(24,472

)

 

 

(15,219

)

Provision for income taxes

 

 

 

 

 

 

 

 

4

 

 

 

2

 

Net loss

 

 

(12,874

)

 

 

(7,967

)

 

 

(24,476

)

 

 

(15,221

)

Unrealized gains on marketable securities, net of tax

 

 

20

 

 

 

88

 

 

 

7

 

 

 

8

 

Comprehensive loss

 

$

(12,854

)

 

$

(7,879

)

 

$

(24,469

)

 

$

(15,213

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share -- basic and diluted

 

$

(0.29

)

 

$

(2.62

)

 

$

(0.54

)

 

$

(5.00

)

Weighted-average common shares outstanding

 

 

45,070,104

 

 

 

3,046,200

 

 

 

44,928,518

 

 

 

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 (Gain)

 

 

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

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

383

 

 

 

 

 

 

 

 

 

383

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,967

)

 

 

(7,967

)

Unrealized gain on available for sale investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

88

 

 

 

 

 

 

88

 

Balance at June 30, 2020

 

 

22,866,246

 

 

$

168,933

 

 

 

 

3,046,200

 

 

$

 

 

 

5,648

 

 

$

5

 

 

$

(90,662

)

 

$

(85,009

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Total

 

 

 

Convertible

Preferred Stock

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Other

Comprehensive

 

 

Accumulated

 

 

Stockholders'

(Deficit)

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss (Gain)

 

 

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

 

Exercise of stock options

 

 

 

 

 

 

 

 

 

332,398

 

 

 

 

 

 

1,256

 

 

 

 

 

 

 

 

 

1,256

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,150

 

 

 

 

 

 

 

 

 

1,150

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,874

)

 

 

(12,874

)

Unrealized gain on available for sale investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20

 

 

 

 

 

 

20

 

Balance at June 30, 2021

 

 

 

 

$

 

 

 

 

45,213,567

 

 

$

 

 

 

472,196

 

 

$

7

 

 

$

(134,356

)

 

$

337,847

 

 

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)

 

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(24,476

)

 

$

(15,221

)

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

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

1,777

 

 

 

679

 

Depreciation

 

 

150

 

 

 

182

 

Amortization of premiums on marketable securities

 

 

332

 

 

 

147

 

Non-cash lease expense

 

 

314

 

 

 

 

Other

 

 

 

 

 

43

 

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

(570

)

 

 

(44

)

Accounts payable

 

 

762

 

 

 

(1,205

)

Accrued expenses

 

 

(434

)

 

 

385

 

Net cash used in operating activities

 

 

(22,145

)

 

 

(15,034

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(586

)

 

 

(51

)

Purchase of marketable securities

 

 

(185,224

)

 

 

(14,618

)

Maturities of marketable securities

 

 

35,360

 

 

 

34,600

 

Net cash (used in) provided by investing activities

 

 

(150,450

)

 

 

19,931

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Payment of deferred offering costs

 

 

 

 

 

(124

)

Proceeds from exercise of stock options

 

 

1,418

 

 

 

 

Net cash (used in) provided by financing activities

 

 

1,418

 

 

 

(124

)

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

 

 

(171,177

)

 

 

4,773

 

Cash, cash equivalents, and restricted cash

 

 

 

 

 

 

 

 

Cash, cash equivalents, and restricted cash - beginning of period

 

 

361,422

 

 

 

73,278

 

Cash, cash equivalents, and restricted cash - end of period

 

$

190,245

 

 

$

78,051

 

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 clinical-stage oncology company pioneering the discovery and development of small molecule, tumor agnostic therapies designed to target p53 mutations. The Company’s headquarters are currently 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 and six months ended June 30, 2021, the Company incurred a net loss of $12,874 and $24,476, respectively.  As of June 30, 2021, the Company used $22,145 of cash for operations. At June 30, 2021, the Company had an accumulated deficit of $134,356. Cash, cash equivalents, and restricted cash at June 30, 2021 were $190,245.  Short and long term marketable securities totaled $149,539 at June 30, 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 (the “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 June 30, 2021, the condensed statements of operations and comprehensive loss, and condensed statements of convertible preferred stock and stockholders’ (deficit) equity for the three and six months ended June 30, 2021 and 2020, and the condensed statements of cash flows for the six months ended June 30, 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 affect 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. As of June 30, 2021, the company’s long-term marketable debt securities have maturity dates no more than 2 years.  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 June 30, 2021 and 2020, the Company recorded $165 and $59 of amortization, respectively.  For the six months ended June 30, 2021 and 2020, the Company recorded $332 and $147 of amortization, respectively  

Restricted cash as of June 30, 2021 included a $822 deposit at the Company’s commercial bank underlying a stand-by letter of credit issued in favor of a landlord (See Note 6) and is classified in current assets.    

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 leases are for office and laboratory space.

6


PMV Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(unaudited)

(in thousands, except share and per share amounts)

 

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.

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 (the “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 include a checking account and a money market 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.

7


PMV Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(unaudited)

(in thousands, except share and per share amounts)

 

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.

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 June 30, 2021 and December 31, 2020:

 

 

 

As of June 30, 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

 

$

38,865

 

 

$

38,865

 

 

$

38,865

 

 

$

 

 

$

 

Corporate securities

 

 

263,799

 

 

 

263,799

 

 

 

 

 

 

263,799

 

 

 

 

Government securities

 

 

32,740

 

 

 

32,740

 

 

 

 

 

 

32,740

 

 

 

 

Total financial assets

 

$

335,404

 

 

$

335,404

 

 

$

38,865

 

 

$

296,539

 

 

$

 

 

 

 

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