PART I. FINANCIAL INFORMATION This section presents Rain Oncology Inc.'s unaudited condensed consolidated financial statements and management's analysis of financial performance [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) This section presents Rain Oncology Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows, detailing financial position and performance for periods ended June 30, 2023 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents Rain Oncology Inc.'s financial position, detailing assets, liabilities, and equity as of June 30, 2023, and December 31, 2022 Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :-------------------------- | :------------ | :---------------- | | Total Assets | $91,723 | $135,180 | | Total Liabilities | $18,434 | $22,144 | | Total Stockholders' Equity | $73,289 | $113,036 | | Cash and cash equivalents | $40,076 | $61,955 | | Short-term investments | $46,214 | $68,499 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section details Rain Oncology Inc.'s financial performance, including operating expenses, interest income, and net loss for the three and six months ended June 30, 2023 and 2022 Condensed Consolidated Statements of Operations and Comprehensive Loss Highlights (in thousands) | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Research and development | $14,980 | $14,257 | $31,657 | $27,812 | | General and administrative | $5,414 | $3,461 | $10,480 | $7,356 | | Restructuring charges | $2,837 | — | $2,837 | — | | Total operating expenses | $23,231 | $17,718 | $44,974 | $35,168 | | Net loss | $(22,064) | $(17,611) | $(42,548) | $(35,005) | | Net loss per share, basic and diluted | $(0.61) | $(0.66) | $(1.17) | $(1.32) | | Interest income | $1,167 | $107 | $2,426 | $163 | [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) This section presents changes in Rain Oncology Inc.'s total stockholders' equity, reflecting net loss, stock-based compensation, and unrealized gains or losses on investments Condensed Consolidated Statements of Stockholders' Equity Highlights (in thousands) | Metric | As of Dec 31, 2022 | As of Mar 31, 2023 | As of Jun 30, 2023 | | :-------------------------------- | :----------------- | :----------------- | :----------------- | | Total Stockholders' Equity | $113,036 | $94,557 | $73,289 | | Net Loss (Q1 2023) | | $(20,484) | | | Net Loss (Q2 2023) | | | $(22,064) | | Stock-based compensation expense (H1 2023) | | $1,568 | $837 | | Unrealized gain (loss) on investments (H1 2023) | | $119 | $(53) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes Rain Oncology Inc.'s cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2023 and 2022 Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Net cash used in operating activities | $(45,463) | $(34,542) | | Net cash provided by investing activities | $23,106 | $52,760 | | Net cash provided by financing activities | $478 | $411 | | Net (decrease) increase in cash and cash equivalents | $(21,879) | $18,629 | | Cash and cash equivalents at end of period | $40,076 | $43,409 | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements, clarifying accounting policies and specific financial items [Note 1 – Organization and Nature of Operations](index=7&type=section&id=Note%201%20%E2%80%93%20Organization%20and%20Nature%20of%20Operations) This note describes Rain Oncology Inc.'s business as a precision oncology company, its lead product candidate milademetan, and its financial condition including accumulated deficit and liquidity - Rain Oncology Inc. is a precision oncology company developing therapies targeting oncogenic drivers, with milademetan as its lead product candidate, an oral inhibitor of the MDM2-p53 complex[17](index=17&type=chunk) - The company has incurred significant net losses and negative cash flows since its inception, with an accumulated deficit of **$208.2 million** as of June 30, 2023[20](index=20&type=chunk)[102](index=102&type=chunk) - Management believes current cash, cash equivalents, and short-term investments are sufficient to meet obligations for at least twelve months from the filing date[21](index=21&type=chunk) [Note 2 – Summary of Significant Accounting Policies](index=8&type=section&id=Note%202%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and methods used in preparing the financial statements, including significant estimates, available-for-sale securities, and research and development costs - The preparation of financial statements involves significant estimates, particularly for clinical trial expense accruals[22](index=22&type=chunk) - Available-for-sale (AFS) securities are classified as current assets and carried at fair value, with unrealized gains and losses reported in accumulated other comprehensive loss[24](index=24&type=chunk)[25](index=25&type=chunk) - Research and development costs are expensed as incurred, and stock-based compensation is recognized over the requisite service period[28](index=28&type=chunk)[30](index=30&type=chunk) - The company adopted ASU 2016-13 (Topic 326) on January 1, 2023, with no significant impact on its financial statements[39](index=39&type=chunk) [Note 3 – Fair Value Measurements](index=13&type=section&id=Note%203%20%E2%80%93%20Fair%20Value%20Measurements) This note details the fair value hierarchy and measurements for financial assets, including cash equivalents and available-for-sale securities, classified into three levels - Financial assets measured at fair value on a recurring basis include cash equivalents and available-for-sale securities, classified using a three-tier hierarchy[44](index=44&type=chunk) - Money market funds and U.S. government securities are classified as Level 1, while commercial paper and U.S. agency bonds are classified as Level 2[45](index=45&type=chunk)[46](index=46&type=chunk) Fair Value Measurements of Cash Equivalents and Short-term Investments (in thousands) | Category | June 30, 2023 (Total Fair Value) | December 31, 2022 (Total Fair Value) | | :------------------------------------ | :------------------------------- | :----------------------------------- | | Money market funds | $14,051 | $8,528 | | Commercial paper | $36,169 | $83,423 | | U.S. government securities | $16,337 | $10,837 | | U.S. agency bonds | $19,066 | $22,143 | | Corporate debt securities | — | $997 | | **Total** | **$85,623** | **$125,928** | [Note 4 – Investments](index=16&type=section&id=Note%204%20%E2%80%93%20Investments) This note provides details on Rain Oncology Inc.'s available-for-sale securities, including fair value, unrealized gains and losses, and maturity profiles Available-for-Sale Securities (in thousands) | Metric | June 30, 2023 (Fair Value) | December 31, 2022 (Fair Value) | | :-------------------------- | :------------------------- | :--------------------------- | | Total AFS Securities | $85,623 | $125,928 | | Gross Unrealized Gains | $5 | $15 | | Gross Unrealized Losses | $(105) | $(181) | | Due within one year | $46,214 | $63,595 | | Due within one to two years | — | $4,904 | - Unrealized losses as of June 30, 2023, were primarily due to changes in interest rates, not increased credit risks, and the company does not intend to sell these investments before maturity[55](index=55&type=chunk) [Note 5 - Condensed Consolidated Balance Sheet Details](index=18&type=section&id=Note%205%20-%20Condensed%20Consolidated%20Balance%20Sheet%20Details) This note provides a detailed breakdown of specific balance sheet accounts, including prepaid and other current assets, property and equipment, and other accrued liabilities Prepaid and Other Current Assets (in thousands) | Category | June 30, 2023 | December 31, 2022 | | :-------------------------- | :------------ | :---------------- | | Prepaid insurance | $1,821 | $913 | | Prepaid research and development | $1,585 | $1,103 | | Total | $4,703 | $3,174 | Property and Equipment, Net (in thousands) | Category | June 30, 2023 | December 31, 2022 | | :-------------------------- | :------------ | :---------------- | | Total Property and equipment, net | $361 | $93 | | Construction in progress | $312 | $8 | | Accumulated depreciation and amortization expense | $(271) | $(236) | Other Accrued Liabilities (in thousands) | Category | June 30, 2023 | December 31, 2022 | | :-------------------------- | :------------ | :---------------- | | Accrued payroll and related | $1,713 | $229 | | Accrued bonus | $1,055 | $3,379 | | Total | $4,986 | $6,424 | [Note 6 – Stockholders' Equity](index=19&type=section&id=Note%206%20%E2%80%93%20Stockholders%27%20Equity) This note details Rain Oncology Inc.'s capital structure, stock option and restricted stock unit activity, and related stock-based compensation expense - The company's capital structure includes **250 million** authorized common shares (**$0.001 par value**), comprising **200 million** voting and **50 million** non-voting shares, and **10 million** undesignated preferred shares[61](index=61&type=chunk) - The 2021 Equity Incentive Plan reserved **3,246,120 shares** initially, with an automatic increase of **1,451,611 shares** on January 1, 2023[64](index=64&type=chunk) Stock Option and RSU Activity (as of June 30, 2023) | Metric | Stock Options | Restricted Stock Units | | :------------------------------------ | :------------ | :--------------------- | | Outstanding as of Dec 31, 2022 | 2,593,761 | 8,945 | | Granted (H1 2023) | 1,312,762 | 95,333 | | Forfeited or cancelled (H1 2023) | (1,009,324) | (41,906) | | Outstanding as of June 30, 2023 | 2,876,442 | 62,372 | | Weighted-average exercise price (options) | $8.27 | | | Weighted-average grant date fair value (RSUs) | | $9.27 | Stock-Based Compensation Expense (in thousands) | Category | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Research and development | $534 | $1,203 | $1,660 | $2,093 | | General and administrative | $266 | $214 | $708 | $566 | | Restructuring charges | $37 | — | $37 | — | | **Total** | **$837** | **$1,417** | **$2,405** | **$2,659** | - As of June 30, 2023, total unrecognized compensation cost was **$11.2 million**, expected to be recognized over approximately **2.8 years**[69](index=69&type=chunk)[178](index=178&type=chunk) [Note 7 – License Agreements](index=24&type=section&id=Note%207%20%E2%80%93%20License%20Agreements) This note describes Rain Oncology Inc.'s exclusive license for milademetan, including potential milestone payments and royalties, and the termination of other development agreements - The company holds worldwide exclusive rights to milademetan from Daiichi Sankyo, with potential future milestone payments up to **$223.5 million** and high single-digit royalties on net sales[77](index=77&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk) - A **$2.0 million** milestone fee related to the Phase 3 MANTRA trial remained accrued as of June 30, 2023[80](index=80&type=chunk) - The intellectual property license agreement with Drexel University for the RAD52 program was terminated in February 2023 to focus resources on milademetan[85](index=85&type=chunk) - The clinical supply agreement with Roche for atezolizumab was terminated in May 2023[86](index=86&type=chunk)[124](index=124&type=chunk) [Note 8 – Commitments and Contingencies](index=26&type=section&id=Note%208%20%E2%80%93%20Commitments%20and%20Contingencies) This note outlines Rain Oncology Inc.'s noncancelable operating lease for its corporate headquarters, including recent amendments and future minimum lease payments - The company has a noncancelable operating lease for its corporate headquarters in Newark, California, expiring in September 2024[87](index=87&type=chunk)[90](index=90&type=chunk) - Recent amendments expanded the leased premises, with a new expansion commencing July 2023 and a temporary space provided rent-free (excluding operating costs) until then[91](index=91&type=chunk)[92](index=92&type=chunk) Future Minimum Lease Payments (in thousands, as of June 30, 2023) | Year | Amount | | :--- | :----- | | 2023 (remainder) | $86 | | 2024 | $130 | | **Total minimum lease payments** | **$216** | [Note 9 – Employee Benefits](index=29&type=section&id=Note%209%20%E2%80%93%20Employee%20Benefits) This note details Rain Oncology Inc.'s 401(k) matching contributions for the three and six months ended June 30, 2023 and 2022 401(k) Matching Contributions (in thousands) | Period | 2023 | 2022 | | :-------------------------- | :--- | :--- | | Three Months Ended June 30 | $143 | $156 | | Six Months Ended June 30 | $577 | $231 | [Note 10 – Restructuring Charges](index=29&type=section&id=Note%2010%20%E2%80%93%20Restructuring%20Charges) This note explains the **$2.8 million** restructuring charges incurred due to a May 2023 workforce reduction, detailing cash severance and stock-based compensation components - In May 2023, the company announced a workforce reduction as part of a clinical strategy reprioritization, resulting in **$2.8 million** in restructuring charges for the three and six months ended June 30, 2023[96](index=96&type=chunk) - These charges comprised **$2.8 million** in cash severance, employee transition, and related benefits, plus **$37,000** in stock-based compensation expense[96](index=96&type=chunk) - Approximately **$1.7 million** in unpaid cash severance and related benefits remained outstanding as of June 30, 2023, expected to be paid in Q3 2023[96](index=96&type=chunk) [Note 11 – Net Loss Per Share](index=29&type=section&id=Note%2011%20%E2%80%93%20Net%20Loss%20Per%20Share) This note presents Rain Oncology Inc.'s basic and diluted net loss per share and explains the exclusion of potentially dilutive securities due to the company's net loss position Net Loss Per Share (Basic and Diluted) | Period | 2023 | 2022 | | :-------------------------- | :----- | :----- | | Three Months Ended June 30 | $(0.61) | $(0.66) | | Six Months Ended June 30 | $(1.17) | $(1.32) | - Potentially dilutive securities, including **2,876,442** stock options and **62,372** restricted stock units, were excluded from diluted net loss per share calculations as their inclusion would be anti-dilutive due to the company's net loss position[97](index=97&type=chunk) [Note 12 – Subsequent Event](index=30&type=section&id=Note%2012%20%E2%80%93%20Subsequent%20Event) This note discloses a securities class action lawsuit filed on July 17, 2023, against Rain Oncology Inc. and certain officers, alleging misrepresentations regarding clinical trial design - On July 17, 2023, a securities class action lawsuit was filed against the company and certain officers, alleging violations of Sections 10(b) and 20(a) of the Exchange Act[98](index=98&type=chunk) - The lawsuit claims false and misleading information regarding the Phase 3 MANTRA trial design quality and risks related to clinical development strategy and regulatory approval[98](index=98&type=chunk) - The company believes it has meritorious defenses and intends to defend vigorously, but cannot estimate the possible costs at this early stage[99](index=99&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Rain Oncology Inc.'s financial condition and results of operations, highlighting operating losses, clinical trial setbacks, strategic reprioritization, and liquidity [Overview](index=21&type=section&id=Overview) This section introduces Rain Oncology as a precision oncology company focused on milademetan, detailing its significant operating losses and current liquidity position - Rain Oncology is a precision oncology company focused on developing milademetan, an MDM2-p53 complex inhibitor, for genetically selected patients[101](index=101&type=chunk) - The company has incurred significant operating losses since inception, with an accumulated deficit of **$208.2 million** and net losses of **$22.1 million** (Q2 2023) and **$42.5 million** (H1 2023)[102](index=102&type=chunk) - As of June 30, 2023, cash, cash equivalents, and short-term investments totaled **$86.3 million**, which management believes is sufficient for at least the next twelve months, but additional capital will be required for future R&D[102](index=102&type=chunk) [Recent Developments](index=22&type=section&id=Recent%20Developments) This section details the Phase 3 MANTRA trial's failure to meet its primary endpoint, leading to strategic reprioritization, suspension of studies, and a significant workforce reduction - In May 2023, the Phase 3 MANTRA trial for milademetan in dedifferentiated (DD) LPS did not meet its primary endpoint of progression-free survival (PFS)[107](index=107&type=chunk) - The median PFS for milademetan was **3.6 months** compared to **2.2 months** for trabectedin (HR 0.89, p=0.53), leading to the decision not to pursue further development in DD LPS[108](index=108&type=chunk) - Strategic priorities were realigned, including suspending enrollment in the MANTRA-2 basket study, terminating plans for the MANTRA-4 trial, and reducing the full-time employee workforce by approximately **65%**[109](index=109&type=chunk) [Our Development Pipeline](index=23&type=section&id=Our%20Development%20Pipeline) This section describes Rain Oncology Inc.'s lead product candidate, milademetan, and its clinical development plan, including recent trial outcomes and program terminations [Our Lead Product Candidate, Milademetan](index=24&type=section&id=Our%20Lead%20Product%20Candidate%2C%20Milademetan) This section introduces milademetan as a small molecule, oral inhibitor of the MDM2-p53 complex, designed to reactivate p53 in MDM2-dependent cancers - Milademetan is a small molecule, oral inhibitor of MDM2-p53 complex, designed to reactivate p53 in MDM2-dependent cancers[113](index=113&type=chunk)[115](index=115&type=chunk) - The therapy aims to improve peak drug exposure and minimize hematologic toxicity through an optimized dosing schedule[113](index=113&type=chunk) [Clinical Development Plan](index=24&type=section&id=Clinical%20Development%20Plan) This section outlines the outcomes of the Phase 3 MANTRA trial, leading to the decision not to pursue further development in DDLPS and the suspension of other studies - The Phase 3 MANTRA trial for DDLPS patients did not meet its primary endpoint of PFS, leading to the decision not to pursue further development in this indication[107](index=107&type=chunk)[108](index=108&type=chunk)[119](index=119&type=chunk) - Enrollment for the Phase 2 MANTRA-2 MDM2-amplified tumor-agnostic basket study has been suspended[109](index=109&type=chunk)[122](index=122&type=chunk) - Plans for the MANTRA-4 Phase 1/2 trial, evaluating milademetan in combination with atezolizumab for CDKN2A-loss, p53 WT advanced solid tumors, have been terminated[109](index=109&type=chunk)[125](index=125&type=chunk) [Collaboration and License Agreements](index=26&type=section&id=Collaboration%20and%20License%20Agreements) This section refers to Note 7 for details on Rain Oncology Inc.'s license agreements for its product candidates and development programs - The company is party to license agreements for its product candidates and development programs, with details provided in Note 7 to the Condensed Consolidated Financial Statements[126](index=126&type=chunk) [Components of Our Results of Operations](index=28&type=section&id=Components%20of%20Our%20Results%20of%20Operations) This section defines the key components of Rain Oncology Inc.'s results of operations, including revenue, research and development expenses, general and administrative expenses, and interest income [Revenue](index=28&type=section&id=Revenue) This section states that Rain Oncology Inc. has not generated any revenue from product sales, licenses, or collaborations since inception - The company has not generated any revenue from product sales, licenses, or collaborations since inception and does not expect to in the foreseeable future[128](index=128&type=chunk) [Operating Expenses](index=28&type=section&id=Operating%20Expenses) This section clarifies that Rain Oncology Inc.'s operating expenses consist solely of research and development costs and general and administrative costs - Operating expenses consist solely of research and development costs and general and administrative costs[129](index=129&type=chunk) [Research and Development Expenses](index=28&type=section&id=Research%20and%20Development%20Expenses) This section defines research and development expenses, including costs for drug discovery, clinical development, personnel, and external services, recognized as incurred - Research and development expenses are recognized as incurred and include costs for drug discovery, preclinical and clinical development, personnel, external CROs, manufacturing, regulatory compliance, and license fees[130](index=130&type=chunk)[131](index=131&type=chunk) [General and Administrative Expenses](index=29&type=section&id=General%20and%20Administrative%20Expenses) This section describes general and administrative expenses, including salaries, legal fees, professional services, and facility-related costs, with expected increases due to public company operations - General and administrative expenses include salaries, legal fees, professional services, and facility-related costs, with expectations for increased costs due to public company operations[134](index=134&type=chunk) [Interest Income](index=29&type=section&id=Interest%20Income) This section clarifies that Rain Oncology Inc.'s interest income is derived from its available-for-sale (AFS) securities - Interest income is derived from the company's available-for-sale (AFS) securities[135](index=135&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) This section provides a detailed comparison of Rain Oncology Inc.'s financial performance for the three and six months ended June 30, 2023 and 2022 [Comparison of Three and Six Months Ended June 30, 2023 and 2022](index=30&type=section&id=Comparison%20of%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202023%20and%202022) This section presents a table summarizing Rain Oncology Inc.'s key financial metrics for the comparative periods, including operating expenses, net loss, and interest income Financial Performance Comparison (in thousands) | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | Change (3M) | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | Change (6M) | | :-------------------------- | :--------------------------- | :--------------------------- | :---------- | :--------------------------- | :--------------------------- | :---------- | | Research and development | $14,980 | $14,257 | $723 | $31,657 | $27,812 | $3,845 | | General and administrative | $5,414 | $3,461 | $1,953 | $10,480 | $7,356 | $3,124 | | Restructuring charges | $2,837 | — | $2,837 | $2,837 | — | $2,837 | | Total operating expenses | $23,231 | $17,718 | $5,513 | $44,974 | $35,168 | $9,806 | | Net loss | $(22,064) | $(17,611) | $(4,453) | $(42,548) | $(35,005) | $(7,543) | | Interest income | $1,167 | $107 | $1,060 | $2,426 | $163 | $2,263 | [Research and Development Expenses](index=30&type=section&id=Research%20and%20Development%20Expenses) This section analyzes changes in Rain Oncology Inc.'s R&D expenses, attributing increases to milademetan clinical trial costs and payroll, with expected future decreases due to strategic reprioritization - R&D expenses increased by **$0.7 million** to **$15.0 million** for Q2 2023 and by **$3.8 million** to **$31.7 million** for H1 2023, primarily due to milademetan clinical trial costs and higher payroll[138](index=138&type=chunk)[139](index=139&type=chunk) - Non-cash stock-based compensation included in R&D was **$0.5 million** for Q2 2023 and **$1.7 million** for H1 2023[138](index=138&type=chunk)[139](index=139&type=chunk) - R&D costs are expected to significantly decrease for the remainder of 2023 following the reprioritization of the clinical strategy[139](index=139&type=chunk) [General and Administrative Expenses](index=30&type=section&id=General%20and%20Administrative%20Expenses) This section examines the increase in Rain Oncology Inc.'s G&A expenses, driven by higher professional services, legal, and payroll costs, with expected future decreases due to business strategy optimization - G&A expenses increased by **$1.9 million** to **$5.4 million** for Q2 2023 and by **$3.1 million** to **$10.5 million** for H1 2023, driven by higher professional services, legal, and payroll costs[140](index=140&type=chunk)[141](index=141&type=chunk) - Non-cash stock-based compensation in G&A was approximately **$0.3 million** for Q2 2023 and **$0.7 million** for H1 2023[140](index=140&type=chunk)[141](index=141&type=chunk) - G&A expenses are expected to significantly decrease for the remainder of 2023 due to the optimization of the company's business strategy[141](index=141&type=chunk) [Restructuring Charges](index=31&type=section&id=Restructuring%20Charges) This section details the **$2.8 million** restructuring charges incurred in Q2 and H1 2023, primarily for cash severance and employee benefits related to a May 2023 workforce reduction - The company recorded **$2.8 million** in restructuring charges for Q2 and H1 2023, primarily for cash severance and employee benefits related to a workforce reduction in May 2023[142](index=142&type=chunk) - Approximately **$1.6 million** of these charges remained unpaid as of June 30, 2023, with expected payment in Q3 2023[144](index=144&type=chunk) [Other Income](index=32&type=section&id=Other%20Income) This section clarifies that Rain Oncology Inc.'s other income primarily represents interest income from money market or short-term investments - Other income for the periods presented primarily represents interest income from money market or short-term investments[145](index=145&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses Rain Oncology Inc.'s historical operating losses, current cash position, future funding requirements, and sources of capital - The company has incurred significant operating losses since inception and expects to continue incurring substantial expenses for R&D, requiring additional capital[146](index=146&type=chunk) - As of June 30, 2023, the company had **$86.3 million** in cash, cash equivalents, and short-term investments, which is estimated to be sufficient for at least the next twelve months[150](index=150&type=chunk) - Funding sources have included convertible promissory notes (**$9.9 million** gross), convertible preferred stock (**$81.9 million** gross), and common stock offerings, including **$52.9 million** net proceeds from the November 2022 offering and **$0.3 million** from the ATM facility in H1 2023[102](index=102&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk) [Future Funding Requirements](index=32&type=section&id=Future%20Funding%20Requirements) This section outlines the expected increase in future expenses due to ongoing development activities and pipeline expansion, highlighting the uncertainty of capital outlays and the need for additional funding - Future expenses are expected to increase substantially due to ongoing development activities, new clinical trials, pipeline expansion, marketing approvals, manufacturing, intellectual property, and public company operations[151](index=151&type=chunk)[154](index=154&type=chunk) - The timing and amounts of future capital outlays are uncertain due to the unpredictable nature of drug development[154](index=154&type=chunk) - Inability to raise additional funds through equity, debt, or collaborations could lead to delays, limitations, or termination of product development and commercialization efforts[159](index=159&type=chunk) [Cash Flows](index=33&type=section&id=Cash%20Flows) This section provides a summary of Rain Oncology Inc.'s cash flows from operating, investing, and financing activities for the six months ended June 30 Summary of Cash Flows (in thousands, 6 Months Ended June 30) | Activity | 2023 | 2022 | | :-------------------------- | :----------- | :----------- | | Operating activities | $(45,463) | $(34,542) | | Investing activities | $23,106 | $52,760 | | Financing activities | $478 | $411 | | **Net (decrease) increase** | **$(21,879)** | **$18,629** | [Operating Activities](index=33&type=section&id=Operating%20Activities) This section explains the net cash used in Rain Oncology Inc.'s operating activities, primarily driven by net loss and changes in operating assets and liabilities - Net cash used in operating activities increased to **$45.5 million** for H1 2023, primarily due to a net loss of **$42.5 million** and changes in operating assets and liabilities[161](index=161&type=chunk) [Investing Activities](index=33&type=section&id=Investing%20Activities) This section details the net cash provided by Rain Oncology Inc.'s investing activities, mainly from maturities of short-term investments partially offset by new purchases - Net cash provided by investing activities was **$23.1 million** for H1 2023, mainly from **$50.2 million** in maturities of short-term investments, partially offset by **$26.7 million** in purchases[165](index=165&type=chunk) [Financing Activities](index=33&type=section&id=Financing%20Activities) This section describes the net cash provided by Rain Oncology Inc.'s financing activities, primarily from ATM facility proceeds and equity incentive plans - Net cash provided by financing activities was **$0.5 million** for H1 2023, primarily from **$0.3 million** in net proceeds from the ATM Facility and **$0.2 million** from equity incentive plans and ESPP purchases[167](index=167&type=chunk) [Obligations and other Commitments](index=33&type=section&id=Obligations%20and%20other%20Commitments) This section outlines Rain Oncology Inc.'s potential future milestone and royalty payment obligations under license agreements and accrued research and development obligations - The company has potential future milestone and royalty payment obligations under license agreements, which are generally cancelable[169](index=169&type=chunk) - Incurred and accrued research and development obligations were **$7.4 million** as of June 30, 2023[170](index=170&type=chunk) [Critical Accounting Policies and Use of Estimates](index=33&type=section&id=Critical%20Accounting%20Policies%20and%20Use%20of%20Estimates) This section discusses Rain Oncology Inc.'s critical accounting policies and estimates, including accrued research and development and stock-based compensation - There have been no significant changes to critical accounting policies and use of estimates, except as described in Note 2[172](index=172&type=chunk) [Accrued Research and Development](index=34&type=section&id=Accrued%20Research%20and%20Development) This section explains the estimation process for accrued research and development expenses and the balance of **$7.4 million** as of June 30, 2023 - The company estimates R&D expenses based on contract terms, service progress, and communications with vendors, with accrued R&D balances of **$7.4 million** as of June 30, 2023[173](index=173&type=chunk)[174](index=174&type=chunk) [Stock-Based Compensation](index=34&type=section&id=Stock-Based%20Compensation) This section details the recognition of stock-based compensation expense, fair value estimation methods, and total unrecognized compensation costs - Stock-based compensation expense is recognized over the vesting period, with fair value estimated using the Black-Scholes model for stock options and the closing stock price for RSUs[176](index=176&type=chunk)[177](index=177&type=chunk) Stock-Based Compensation Expense (in millions) | Period | 2023 | 2022 | | :-------------------------- | :--- | :--- | | Six Months Ended June 30 | $2.4 | $2.7 | | Unvested equity compensation costs not yet recognized (as of June 30, 2023) | $11.2 | | | Weighted average period over which unvested awards are expected to be recognized (in years) | 2.8 | | [Recent Accounting Pronouncements](index=34&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 2 for a description of recent accounting pronouncements and their immaterial impact on Rain Oncology Inc.'s financial position or operating results - A description of recent accounting pronouncements is provided in Note 2, with no material impact on the company's financial position or operating results[179](index=179&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Rain Oncology Inc. is not required to provide detailed quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide detailed market risk disclosures[180](index=180&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that Rain Oncology Inc.'s disclosure controls and procedures were effective as of June 30, 2023, with no material changes in internal control over financial reporting during the quarter - The company's disclosure controls and procedures were deemed effective at the reasonable assurance level as of June 30, 2023[182](index=182&type=chunk) - No material changes in internal control over financial reporting were identified during the quarter ended June 30, 2023[183](index=183&type=chunk) PART II. OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal proceedings, updated risk factors, and exhibits [Item 1. Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 12 for details on legal proceedings, specifically a recently filed securities class action lawsuit against Rain Oncology Inc. and certain officers - Legal proceedings are discussed in Note 12, which details a securities class action lawsuit filed on July 17, 2023[186](index=186&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) This section updates Rain Oncology Inc.'s risk factors, emphasizing new risks associated with resource reallocation and a significant workforce reduction following clinical strategy reprioritization - The company began reallocating resources in Q2 2023 to align with business priorities, which may adversely affect future revenue and operating results[188](index=188&type=chunk) - A workforce reduction of approximately **65%** was approved in May 2023 as part of efforts to reprioritize the clinical strategy and optimize resources[189](index=189&type=chunk) - Managing these organizational changes and potential further reductions imposes significant responsibilities on management and could impact future financial performance[190](index=190&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds to report[191](index=191&type=chunk) [Item 3. Defaults Upon Senior Securities](index=34&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities to report for the period - No defaults upon senior securities to report[192](index=192&type=chunk) [Item 4. Mine Safety Disclosures](index=34&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) There were no mine safety disclosures to report for the period - No mine safety disclosures to report[193](index=193&type=chunk) [Item 5. Other Information](index=35&type=section&id=Item%205.%20Other%20Information) There was no other information to report for the period - No other information to report[194](index=194&type=chunk) [Item 6. Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed or furnished as part of the Quarterly Report on Form 10-Q, including corporate governance documents, certifications, and XBRL interactive data files - The exhibits include corporate governance documents (e.g., Certificate of Incorporation, Bylaws), common stock certificates, investor rights agreements, certifications (31.1, 31.2, 32.1), and Inline XBRL documents[196](index=196&type=chunk) [Signatures](index=36&type=section&id=Signatures) This section contains the required signatures for the Quarterly Report on Form 10-Q, certifying its submission - The report is signed by Avanish Vellanki, Chairman and Chief Executive Officer, and Josephine Bruce, Director of Accounting[200](index=200&type=chunk)

PART I. FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for Rain Oncology Inc., including the balance sheets, statements of operations and comprehensive loss, statements of stockholders' equity, and statements of cash flows, along with their accompanying notes. The financial data highlights a decrease in total assets and stockholders' equity, an increase in net loss, and significant cash usage in operating activities for the three months ended March 31, 2023, compared to the prior year [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a decrease in total assets and stockholders' equity from December 31, 2022, to March 31, 2023, primarily driven by a reduction in cash, cash equivalents, and short-term investments, alongside an increased accumulated deficit | Metric | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Total assets | $114,178 | $135,180 | | Total liabilities | $19,621 | $22,144 | | Total stockholders' equity | $94,557 | $113,036 | | Cash and cash equivalents | $44,100 | $61,955 | | Short-term investments | $65,670 | $68,499 | | Accumulated deficit | $(186,172) | $(165,688) | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The company reported an increased net loss for the three months ended March 31, 2023, compared to the same period in 2022, primarily due to higher operating expenses, particularly in research and development and general and administrative costs. Interest income saw a substantial increase | Metric (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Research and development | $16,677 | $13,555 | | General and administrative | $5,066 | $3,895 | | Total operating expenses | $21,743 | $17,450 | | Loss from operations | $(21,743) | $(17,450) | | Interest income | $1,259 | $56 | | Net loss | $(20,484) | $(17,394) | | Net loss per share | $(0.56) | $(0.66) | - Interest income increased significantly from **$56 thousand** in Q1 2022 to **$1,259 thousand** in Q1 2023[9](index=9&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity decreased from $113.0 million at December 31, 2022, to $94.6 million at March 31, 2023, primarily due to the net loss incurred during the period, partially offset by stock-based compensation and equity financings | Item (in thousands) | December 31, 2022 | March 31, 2023 | | :------------------ | :---------------- | :------------- | | Total Stockholders' Equity | $113,036 | $94,557 | | Net loss | — | $(20,484) | | Stock-based compensation expense | — | $1,568 | | Additional paid-in capital | $278,853 | $280,739 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash and cash equivalents decreased significantly due to increased net cash used in operating activities and a reduction in cash provided by investing activities, despite a slight increase in cash from financing activities | Cash Flow Activity (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(21,839) | $(17,110) | | Net cash provided by investing activities | $3,518 | $13,436 | | Net cash provided by financing activities | $466 | $399 | | Net decrease in cash and cash equivalents | $(17,855) | $(3,275) | | Cash and cash equivalents at end of period | $44,100 | $21,505 | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) These notes provide detailed information on the company's organization, significant accounting policies, fair value measurements, investments, balance sheet details, stockholders' equity, license agreements, commitments, employee benefits, and net loss per share, offering context to the condensed consolidated financial statements [Note 1 – Organization and Nature of Operations](index=7&type=section&id=Note%201%20%E2%80%93%20Organization%20and%20Nature%20of%20Operations) Rain Oncology Inc. is a late-stage precision oncology company focused on developing therapies targeting oncogenic drivers, with its lead product candidate, milademetan, an MDM2-p53 complex inhibitor. The company changed its name from Rain Therapeutics Inc. in December 2022 and has incurred significant operating losses since inception, funding operations through equity offerings and convertible notes, with current capital expected to last at least twelve months - Rain Oncology Inc. is a late-stage precision oncology company developing therapies that target oncogenic drivers, with its lead product candidate, milademetan, a small molecule, oral inhibitor of the MDM2-p53 complex[17](index=17&type=chunk) - The company changed its name from 'Rain Therapeutics Inc.' to 'Rain Oncology Inc.' effective **December 30, 2022**[19](index=19&type=chunk) - The company has incurred net losses and negative cash flows from operating activities since its inception and expects current cash, cash equivalents, and short-term investments to provide sufficient funds for at least **twelve months** from the filing date[21](index=21&type=chunk)[22](index=22&type=chunk) [Note 2 – Summary of Significant Accounting Policies](index=8&type=section&id=Note%202%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the company's key accounting policies, including the use of estimates (primarily for clinical trial accruals), classification of cash equivalents and available-for-sale investments, treatment of credit losses, expensing of research and development costs, and methods for stock-based compensation and income taxes. The adoption of ASU 2016-13 on credit losses in January 2023 did not have a significant impact - The most significant estimate in the financial statements relates to clinical trial expense accruals[23](index=23&type=chunk) - Available-for-sale securities are classified as current assets, and unrealized gains and losses are reported in accumulated other comprehensive loss[25](index=25&type=chunk)[26](index=26&type=chunk) - The company adopted ASU 2016-13, Financial Instruments—Credit Losses, on **January 1, 2023**, which did not have a significant impact on its condensed consolidated financial statements[37](index=37&type=chunk) [Note 3 – Fair Value Measurements](index=10&type=section&id=Note%203%20%E2%80%93%20Fair%20Value%20Measurements) The company measures financial assets at fair value using a three-tier hierarchy. Money market funds and U.S. government securities are classified as Level 1, while commercial paper, corporate debt securities, and U.S. agency bonds are Level 2. There were no Level 3 assets or transfers between levels during the period - Money market funds and U.S. government securities are classified as **Level 1** investments, while commercial paper, corporate debt securities, and U.S. agency bonds are classified as **Level 2**[41](index=41&type=chunk)[42](index=42&type=chunk) | Category (in thousands) | March 31, 2023 Total Fair Value | December 31, 2022 Total Fair Value | | :---------------------- | :------------------------------ | :------------------------------ | | Money market funds | $6,439 | $8,528 | | Commercial paper | $54,191 | $83,423 | | U.S. government securities | $5,665 | $10,837 | | U.S. agency bonds | $42,946 | $22,143 | | Corporate debt securities | — | $997 | | Total cash equivalents and short-term investments | $109,241 | $125,928 | [Note 4 – Investments](index=13&type=section&id=Note%204%20%E2%80%93%20Investments) The company's available-for-sale (AFS) securities consist of various investment-grade instruments. As of March 31, 2023, $58.2 million of marketable securities were in gross unrealized loss positions, primarily due to interest rate changes, with no intent to sell before maturity and no allowance for credit losses | Metric (in thousands) | March 31, 2023 | December 31, 2022 | | :-------------------- | :------------- | :---------------- | | Amortized Cost | $109,288 | $126,094 | | Unrealized Gains | $13 | $15 | | Unrealized Losses | $(60) | $(181) | | Estimated Fair Value | $109,241 | $125,928 | - As of March 31, 2023, **$58.2 million** of marketable securities were in gross unrealized loss positions, primarily due to changes in interest rates, not increased credit risks[48](index=48&type=chunk)[49](index=49&type=chunk) - The company does not intend to sell its AFS investments before maturity and has no allowance for credit losses[49](index=49&type=chunk) [Note 5 - Condensed Consolidated Balance Sheet Details](index=15&type=section&id=Note%205%20-%20Condensed%20Consolidated%20Balance%20Sheet%20Details) This note provides a breakdown of specific balance sheet accounts. Prepaid and other current assets remained stable, while property and equipment, net, slightly decreased. Other non-current assets also decreased, and other accrued liabilities saw a notable reduction, mainly due to a decrease in accrued bonus | Account (in thousands) | March 31, 2023 | December 31, 2022 | | :--------------------- | :------------- | :---------------- | | Prepaid and other current assets | $3,205 | $3,174 | | Property and equipment, net | $75 | $93 | | Other non-current assets | $904 | $1,201 | | Other accrued liabilities | $3,849 | $6,424 | | Accrued bonus | $1,015 | $3,379 | - Depreciation and amortization expense for the three months ended March 31, 2023, was **$18 thousand**[52](index=52&type=chunk) [Note 6 – Stockholders' Equity](index=16&type=section&id=Note%206%20%E2%80%93%20Stockholders'%20Equity) The company's capital structure includes common stock (voting and non-voting) and preferred stock. Details on equity incentive plans (2021 Plan and ESPP) show automatic annual increases in reserved shares. Stock-based compensation expense increased, and a significant amount of unrecognized compensation cost remains - The company's capital stock consists of **250,000,000 shares** of common stock (**200,000,000 voting**, **50,000,000 non-voting**) and **10,000,000 shares** of undesignated preferred stock[55](index=55&type=chunk) - The 2021 Equity Incentive Plan automatically increased shares reserved by **1,451,611** on January 1, 2023, and the ESPP increased by **362,902 shares** on the same date[62](index=62&type=chunk)[65](index=65&type=chunk) | Metric (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Total stock-based compensation expense | $1,568 | $1,242 | | Unrecognized compensation cost (as of March 31, 2023) | $19,400 | — | | Weighted average period for recognition (as of March 31, 2023) | 2.9 years | — | [Note 7 – License Agreements](index=22&type=section&id=Note%207%20%E2%80%93%20License%20Agreements) The company holds an exclusive worldwide license for milademetan from Daiichi Sankyo, involving potential future milestone payments up to $223.5 million and high single-digit royalties. The preclinical RAD52 program under the Drexel license was discontinued in February 2023 to prioritize milademetan. A clinical supply agreement with Roche provides atezolizumab for combination trials with no financial commitments - The company licensed worldwide rights to milademetan from Daiichi Sankyo, with aggregate future milestone payments of up to **$223.5 million** and high single-digit royalties on net sales[74](index=74&type=chunk)[77](index=77&type=chunk)[80](index=80&type=chunk) - The preclinical program targeting RAD52 under the Drexel license agreement was discontinued in **February 2023** to focus resources on the milademetan clinical program[82](index=82&type=chunk) - A clinical supply agreement with Roche provides atezolizumab for planned combination trials with milademetan, with Rain as the sponsor and no financial commitments to Roche[83](index=83&type=chunk) [Note 8 – Commitments and Contingencies](index=25&type=section&id=Note%208%20%E2%80%93%20Commitments%20and%20Contingencies) The company has an operating lease for its corporate headquarters, which was amended to expand premises and extend the term to September 2024. Future minimum lease payments total $258 thousand, with $164 thousand classified as current. Operating lease expense was $40 thousand for both Q1 2023 and Q1 2022 - The company's operating lease for its corporate headquarters extends until **September 2024**, with amendments in **October 2022** and **March 2023** for premises expansion[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk) | Lease Payments (in thousands) | As of March 31, 2023 | | :---------------------------- | :------------------- | | Total minimum lease payments | $258 | | Operating lease liabilities, current portion | $164 | | Operating lease liabilities, non-current portion | $77 | - Total operating lease expense was **$40 thousand** for both the three months ended March 31, 2023, and 2022[89](index=89&type=chunk) [Note 9 – Employee Benefits](index=26&type=section&id=Note%209%20%E2%80%93%20Employee%20Benefits) The company offers a 401(k) plan to eligible employees, with discretionary matching contributions. Company matching contributions significantly increased to $433,630 for the three months ended March 31, 2023, from $75,000 in the prior year period | 401(k) Contributions | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------- | :-------------------------------- | :-------------------------------- | | Company matching contributions | $433,630 | $75,000 | [Note 10 – Net Loss Per Share](index=26&type=section&id=Note%2010%20%E2%80%93%20Net%20Loss%20Per%20Share) Basic and diluted net loss per share were $(0.56) for Q1 2023, an improvement from $(0.66) in Q1 2022, despite a higher net loss, due to an increase in weighted-average shares outstanding. Potentially dilutive securities, including stock options, RSUs, and ESPP shares, were excluded as their inclusion would be anti-dilutive | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(20,484) | $(17,394) | | Weighted-average shares outstanding | 36,339,851 | 26,511,743 | | Net loss per share, basic and diluted | $(0.56) | $(0.66) | - Potentially dilutive securities, including **3,750,834 stock options**, **104,027 restricted stock units**, and **30,993 ESPP shares** as of March 31, 2023, were excluded from diluted net loss per share calculation as they were anti-dilutive[93](index=93&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and operational results. It highlights the company's focus on its lead product candidate, milademetan, and its clinical development progress, while also discussing significant operating losses, liquidity challenges, and future funding requirements. Key financial changes include increased R&D and G&A expenses, a higher net loss, and a decrease in cash and investments [Overview](index=28&type=section&id=Overview) Rain Oncology Inc. is a late-stage precision oncology company with a tumor-agnostic strategy, focusing on its lead product candidate, milademetan, an MDM2-p53 inhibitor. The company has incurred significant operating losses and accumulated a deficit of $186.2 million as of March 31, 2023, but believes its $109.8 million in cash, cash equivalents, and short-term investments will be sufficient for at least the next twelve months, though additional capital will be required for future development - Rain Oncology is a late-stage precision oncology company developing therapies targeting oncogenic drivers using a tumor-agnostic strategy[95](index=95&type=chunk) - The lead product candidate, milademetan, is an oral, small molecule inhibitor of the MDM2-p53 complex, with a pivotal Phase 3 trial (MANTRA) in LPS and a Phase 2 tumor-agnostic basket trial (MANTRA-2) underway. A Phase 1/2 combination trial (MANTRA-4) is planned for mid-2023[96](index=96&type=chunk) - As of March 31, 2023, the company had an accumulated deficit of **$186.2 million** and cash, cash equivalents, and short-term investments of **$109.8 million**, which are estimated to be sufficient for at least the next **twelve months**, but additional capital will be required[97](index=97&type=chunk) [Recent Developments](index=30&type=section&id=Recent%20Developments) The company expects to release topline data from its MANTRA Phase 3 trial for DDLPS in the second quarter of 2023 and plans to initiate a Phase 1/2 MANTRA-4 clinical trial for milademetan in combination with atezolizumab in mid-2023 - Topline data from the MANTRA Phase 3 registrational trial for DDLPS is expected in the **second quarter of 2023**[100](index=100&type=chunk) - A Phase 1/2 MANTRA-4 clinical trial evaluating milademetan in combination with atezolizumab for CDKN2A loss and wildtype p53 advanced solid tumors is anticipated to commence in **mid-2023**[100](index=100&type=chunk) [Our Development Pipeline](index=30&type=section&id=Our%20Development%20Pipeline) The company's development pipeline is centered on milademetan (RAIN-32), with ongoing clinical trials including the MANTRA Phase 3 trial for DD Liposarcoma (data expected 2Q 2023), the MANTRA-2 Phase 2 MDM2-amplified Basket trial (enrolling), and the planned MANTRA-4 Phase 1/2 trial for CDKN2A loss, p53 WT Advanced Solid Tumors in combination with atezolizumab (planned mid-2023) | INDICATION | TRIAL | STATUS | PLANNED DATA | | :-------------------------------- | :------ | :-------------------- | :----------- | | DD Liposarcoma | MANTRA | Enrollment Completed | 2Q 2023 | | MDM2-amp Basket | MANTRA-2 | Enrolling | | | CDKN2A loss, p53 WT Adv Solid Tumors | MANTRA-4 | Planned: Mid 2023 | | [Our Lead Product Candidate, Milademetan](index=30&type=section&id=Our%20Lead%20Product%20Candidate,%20Milademetan) Milademetan is an oral MDM2 inhibitor designed to reactivate p53, the 'guardian of the genome,' by preventing the formation of the MDM2-p53 complex. Its optimized dosing schedule aims to mitigate dose-limiting hematologic toxicities, potentially broadening its application across MDM2-dependent cancers - Milademetan is a small molecule, oral inhibitor of MDM2, designed to reactivate p53 by preventing the formation of the MDM2-p53 complex[103](index=103&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk) - The optimized dosing schedule for milademetan aims to improve peak drug exposure while minimizing hematologic toxicity, potentially applicable to various MDM2-dependent cancer types[104](index=104&type=chunk) [Clinical Development Plan](index=32&type=section&id=Clinical%20Development%20Plan) The clinical development plan for milademetan includes the MANTRA Phase 3 trial for DDLPS, which completed enrollment in August 2022 with topline data expected in Q2 2023. The MANTRA-2 Phase 2 tumor-agnostic basket trial is enrolling patients with MDM2-amplified solid tumors, showing preliminary anti-tumor activity. A Phase 1/2 MANTRA-4 trial combining milademetan with atezolizumab for CDKN2A loss and wildtype p53 advanced solid tumors is planned for mid-2023 - The MANTRA Phase 3 trial for DDLPS completed enrollment in **August 2022**, with topline data expected in the **second quarter of 2023**[109](index=109&type=chunk) - Preliminary data from the MANTRA-2 Phase 2 trial in MDM2-amplified solid tumors showed **two unconfirmed partial responses** (pancreatic and lung cancer) and promising activity in **two other patients** (biliary tract and breast cancer) among **10 efficacy-evaluable patients**[113](index=113&type=chunk) - The MANTRA-4 Phase 1/2 basket trial, evaluating milademetan in combination with atezolizumab for CDKN2A loss and wildtype p53 advanced solid tumors, is anticipated to start in **mid-2023**[116](index=116&type=chunk) [Components of Our Results of Operations](index=34&type=section&id=Components%20of%20Our%20Results%20of%20Operations) The company has not generated any revenue from product sales or collaborations to date and does not expect to in the foreseeable future. Operating expenses consist solely of research and development (R&D) and general and administrative (G&A) costs, both of which are expected to increase as product candidates advance through development and the company expands its operations as a public entity. Interest income is derived from available-for-sale securities - The company has not generated any revenue from product sales, licenses, or collaborations since inception and does not expect to in the foreseeable future[118](index=118&type=chunk) - Operating expenses are comprised of research and development costs (expensed as incurred) and general and administrative costs, both of which are anticipated to increase[119](index=119&type=chunk)[120](index=120&type=chunk)[124](index=124&type=chunk) | R&D Expense Category (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :---------------------------------- | :-------------------------------- | :-------------------------------- | | Milademetan | $7,994 | $8,551 | | Other research and clinical candidates | $68 | $250 | | Unallocated internal R&D costs | $8,615 | $4,754 | | Total research and development expenses | $16,677 | $13,555 | [Results of Operations](index=37&type=section&id=Results%20of%20Operations) For the three months ended March 31, 2023, total operating expenses increased to $21.7 million from $17.5 million in the prior year, driven by higher R&D and G&A costs. Net loss increased to $20.5 million from $17.4 million, despite a significant increase in interest income | Metric (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change (in thousands) | | :-------------------- | :-------------------------------- | :-------------------------------- | :-------------------- | | Research and development | $16,677 | $13,555 | $3,122 | | General and administrative | $5,066 | $3,895 | $1,171 | | Total operating expenses | $21,743 | $17,450 | $4,293 | | Interest income | $1,259 | $56 | $1,203 | | Net loss | $(20,484) | $(17,394) | $(3,090) | - The increase in R&D expenses was primarily due to clinical trial costs for milademetan and higher payroll-related costs for R&D personnel[127](index=127&type=chunk) - The increase in G&A expenses was mainly due to higher professional services costs (**$0.5 million**), legal costs (**$0.4 million**), and payroll-related costs (**$0.1 million**)[128](index=128&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) The company has historically incurred significant operating losses and expects this trend to continue, necessitating additional capital for future R&D and operations. As of March 31, 2023, cash, cash equivalents, and short-term investments totaled $109.8 million, projected to fund operations for at least twelve months. Future funding will likely come from equity or debt financings, or strategic collaborations, with potential risks of dilution or unfavorable terms - The company has incurred significant operating losses since inception and expects to continue incurring substantial expenses and losses for the foreseeable future[130](index=130&type=chunk) - As of March 31, 2023, cash, cash equivalents, and short-term investments totaled **$109.8 million**, which management believes will be sufficient to meet obligations for at least the next **twelve months**[134](index=134&type=chunk) - Future funding requirements are substantial and will depend on the progress of clinical trials, regulatory approvals, commercialization efforts, and intellectual property protection, with financing expected through equity offerings, debt, or collaborations[135](index=135&type=chunk)[137](index=137&type=chunk)[141](index=141&type=chunk) [Cash Flows](index=42&type=section&id=Cash%20Flows) Net cash used in operating activities increased to $21.8 million for Q1 2023, primarily due to a higher net loss. Net cash provided by investing activities decreased to $3.5 million, while net cash provided by financing activities slightly increased to $0.5 million, mainly from the ATM facility and equity incentive plans | Cash Flow Activity (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(21,839) | $(17,110) | | Net cash provided by investing activities | $3,518 | $13,436 | | Net cash provided by financing activities | $466 | $399 | - Net cash used in operating activities increased primarily due to a higher net loss[143](index=143&type=chunk)[145](index=145&type=chunk) - Net cash provided by financing activities for Q1 2023 included **$0.3 million** from the ATM Facility and **$0.2 million** from option exercises and ESPP purchases[148](index=148&type=chunk) [Obligations and other Commitments](index=43&type=section&id=Obligations%20and%20other%20Commitments) The company has license agreements that may require future milestone and royalty payments, which are contingent and cancelable. Contracts with CROs and other vendors for R&D generally lack minimum purchase commitments and are cancelable. Accrued research and development obligations were $8.0 million as of March 31, 2023 - License agreements may require future milestone and royalty payments contingent on development, regulatory, and commercial achievements, but are cancelable by the company[150](index=150&type=chunk) - Contracts with CROs and other vendors for R&D generally do not contain minimum purchase commitments and are cancelable[151](index=151&type=chunk) - Incurred and accrued research and development obligations were **$8.0 million** as of March 31, 2023, a slight decrease from **$8.2 million** at December 31, 2022[151](index=151&type=chunk)[155](index=155&type=chunk) [Critical Accounting Policies and Use of Estimates](index=43&type=section&id=Critical%20Accounting%20Policies%20and%20Use%20of%20Estimates) There have been no significant changes to critical accounting policies or estimates since the 2022 10-K, except as noted in Note 2. Key estimates include accrued research and development costs, which are based on contract progress and communication with personnel, and stock-based compensation, valued using the Black-Scholes model for options and closing stock price for RSUs - No significant changes to critical accounting policies and use of estimates from the 2022 Annual Report on Form 10-K, except as described in Note 2[153](index=153&type=chunk) - Accrued research and development expenses are estimated based on contract terms and progress, with no material differences experienced between accrued and actual costs to date[154](index=154&type=chunk)[155](index=155&type=chunk) - Stock-based compensation expense is recognized over the vesting period, with stock options valued using the Black-Scholes model and RSUs based on the closing stock price on the grant date[156](index=156&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Rain Oncology Inc. is not required to provide quantitative and qualitative disclosures about market risk - Rain Oncology Inc. is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[161](index=161&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the principal executive and financial officers, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2023. No material changes in internal control over financial reporting were identified during the quarter - Management concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of **March 31, 2023**[163](index=163&type=chunk) - No changes in internal control over financial reporting were identified during the quarter ended **March 31, 2023**, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[164](index=164&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) There are no legal proceedings to report for the period - No legal proceedings were reported[167](index=167&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2022 - There have been no material changes from the risk factors disclosed in Part I, Item 1A of the Annual Report on Form 10-K for the year ended **December 31, 2022**[168](index=168&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report - No unregistered sales of equity securities and use of proceeds were reported[169](index=169&type=chunk) [Item 3. Defaults Upon Senior Securities](index=46&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities to report - No defaults upon senior securities were reported[170](index=170&type=chunk) [Item 4. Mine Safety Disclosures](index=46&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) There are no mine safety disclosures to report - No mine safety disclosures were reported[171](index=171&type=chunk) [Item 5. Other Information](index=46&type=section&id=Item%205.%20Other%20Information) No other information is required to be disclosed in this section - No other information was reported[172](index=172&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed or furnished as part of this Quarterly Report on Form 10-Q, including organizational documents, equity incentive plans, lease agreements, and certifications - The exhibits include the Amended and Restated Certificate of Incorporation, Second Amended and Restated Bylaws, various forms of 2021 Equity Incentive Plan Grant Notices, the Third Amendment to Office Lease Agreement, and certifications from the principal executive and financial officers[174](index=174&type=chunk)

[PART I](index=5&type=section&id=PART%20I) Rain Oncology Inc. is a late-stage precision oncology company developing tumor-agnostic therapies for oncogenic drivers [Item 1. Business](index=5&type=section&id=Item%201.%20Business) Rain Oncology Inc. is a late-stage precision oncology company focused on developing therapies targeting oncogenic drivers, primarily through a tumor-agnostic strategy. Its lead product candidate, milademetan, an oral MDM2 inhibitor, is in pivotal Phase 3 trials for liposarcoma (LPS) and Phase 2 for MDM2-amplified solid tumors, with a Phase 1/2 combination trial planned. The company relies on in-licensed assets, third-party manufacturing, and aims for global regulatory approvals, while discontinuing other preclinical programs to focus resources [Company Overview](index=5&type=section&id=Company%20Overview) - Rain Oncology Inc. is a late-stage precision oncology company developing therapies that target oncogenic drivers, using a tumor-agnostic strategy[18](index=18&type=chunk) - Milademetan (RAIN-32), an oral MDM2 inhibitor, is the lead product candidate, in-licensed from Daiichi Sankyo in September 2020[19](index=19&type=chunk) - A pivotal Phase 3 trial in LPS (MANTRA) commenced in July 2021 with topline data expected in Q2 2023, and a Phase 2 tumor-agnostic basket trial (MANTRA-2) started in November 2021. A Phase 1/2 combination trial (MANTRA-4) is anticipated in mid-2023[19](index=19&type=chunk) [Our Strategy](index=5&type=section&id=Our%20Strategy) - Rapidly advance milademetan through clinical development towards approval in LPS and expansion across MDM2-dependent tumors, engaging regulatory authorities for potential commercial launch[20](index=20&type=chunk) - Increase the probability of clinical benefit by utilizing biomarker-driven patient selection through comprehensive next-generation sequencing (NGS) diagnostic tests[20](index=20&type=chunk) - Maximize commercial success by focusing on tumor-agnostic clinical trials, leveraging existing NGS for rapid patient enrollment and data collection[20](index=20&type=chunk) - Expand the precision oncology pipeline by identifying novel oncogenic drivers, improving existing therapies with narrow therapeutic windows, and targeting emerging classes like synthetic lethality[24](index=24&type=chunk) [Overview of Precision Oncology and Our Approach](index=6&type=section&id=Overview%20of%20Precision%20Oncology%20and%20Our%20Approach) - Precision oncology harnesses tumor biology to design effective cancer treatments, with recent advancements in companion diagnostics and multi-gene NGS assays facilitating biomarker identification[22](index=22&type=chunk) - The company's approach prioritizes a tumor's biological driver over its type for treatment selection, focusing on therapeutics that target genetic alterations in cell-signaling pathways[23](index=23&type=chunk) - Key pillars for successful programs include targeting unambiguous oncogenic addiction, achieving sufficient therapeutic exposure, and strong target engagement during dosing[28](index=28&type=chunk) [Our Development Pipeline](index=7&type=section&id=Our%20Development%20Pipeline) - Rain Oncology retains global development and commercialization rights to all its product candidates, unified by a strategy to target oncogenic drivers[26](index=26&type=chunk) Milademetan (RAIN-32) Clinical Development Pipeline | INDICATION | MANTRA | PRECLINICAL | PHASE 1 | PHASE 2 | PHASE 3 | PARTNER | PLANNED DATA | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | DD Liposarcoma | - | Mila monotherapy | | Enrollment Completed | | | 2Q 2023 | | MDM2-amp Basket | 2 | Mila monotherapy | Enrolling | | | | | | CDKN2A loss, p53 WT Adv Solid Tumors | ব | Mila + atezolizumab | Planned: Mid 2023 | | | Roche | | [Our Lead Product Candidate, Milademetan](index=8&type=section&id=Our%20Lead%20Product%20Candidate%2C%20Milademetan) - Milademetan is an oral MDM2 inhibitor developed for MDM2-dependent cancers, utilizing a rationally designed dosing schedule to mitigate hematologic toxicities and widen the therapeutic window[29](index=29&type=chunk) - Milademetan reactivates p53 by inhibiting MDM2, targeting tumors with wild-type p53 that is functionally suppressed by MDM2 overexpression[30](index=30&type=chunk)[31](index=31&type=chunk) - Phase 1 clinical data showed meaningful antitumor activity in MDM2-amplified liposarcoma (LPS) and other solid tumors, with a **58.5% disease control rate** in LPS patients[32](index=32&type=chunk)[35](index=35&type=chunk) - The pivotal Phase 3 MANTRA trial in DDLPS completed enrollment in August 2022, with topline data expected in Q2 2023. The Phase 2 MANTRA-2 trial for MDM2-amplified solid tumors showed preliminary unconfirmed partial responses in pancreatic and lung cancer[42](index=42&type=chunk)[45](index=45&type=chunk) - A Phase 1/2 MANTRA-4 trial evaluating milademetan in combination with atezolizumab for CDKN2A loss and wildtype p53 advanced solid tumors is planned for mid-2023, based on nonclinical data[47](index=47&type=chunk)[50](index=50&type=chunk) - The Phase 2 MANTRA-3 trial in Merkel cell carcinoma has been deprioritized to rationalize capital use[46](index=46&type=chunk) [Preclinical RAD52 Program](index=11&type=section&id=Preclinical%20RAD52%20Program) - The preclinical program targeting RAD52 in the DNA damage repair pathway was discontinued in **February 2023** to focus financial and personnel resources on the milademetan clinical program[51](index=51&type=chunk)[62](index=62&type=chunk) [Collaboration and License Agreements](index=11&type=section&id=Collaboration%20and%20License%20Agreements) - The company holds an exclusive worldwide license for milademetan from Daiichi Sankyo, involving an initial **$5.0 million upfront payment** and potential future milestone payments up to **$223.5 million**, plus high single-digit royalties on net sales[52](index=52&type=chunk)[54](index=54&type=chunk)[58](index=58&type=chunk) - A **$5.5 million milestone fee** was recorded in 2021 for the MANTRA Phase 3 trial initiation, later reduced by **$1.0 million** in 2022, with the remaining **$2.0 million** due by June 30, 2023[54](index=54&type=chunk)[55](index=55&type=chunk) - A clinical supply agreement with Roche provides atezolizumab for combination trials (MANTRA-4), with Rain Oncology as the sponsor and no financial commitments to Roche[63](index=63&type=chunk) - The Drexel License Agreement for RAD52 inhibitors was terminated in **February 2023** to reallocate resources to the milademetan program[61](index=61&type=chunk)[62](index=62&type=chunk) [Manufacturing and Supply](index=13&type=section&id=Manufacturing%20and%20Supply) - The company relies entirely on third-party contract manufacturing organizations (CMOs) for the manufacture of drug candidates for preclinical, clinical, and potential commercial supplies[64](index=64&type=chunk)[65](index=65&type=chunk) - Manufacturing processes, including those transferred from Daiichi Sankyo, are subject to extensive regulations, including Current Good Manufacturing Practice (cGMP) requirements and periodic FDA inspections[67](index=67&type=chunk)[68](index=68&type=chunk) [Intellectual Property](index=14&type=section&id=Intellectual%20Property) - The company protects its proprietary technologies through patents, trademarks, trade secrets, know-how, and in-licensing, focusing on composition of matter, methods of use, and related technologies for product candidates[69](index=69&type=chunk) - As of December 31, 2022, the milademetan patent portfolio, exclusively licensed from Daiichi Sankyo, includes **14 issued U.S. patents**, over **100 issued foreign patents**, and numerous pending applications, with expected expirations between **2032 and 2037**[74](index=74&type=chunk)[75](index=75&type=chunk) - Patent terms are generally **20 years** from filing, with potential for extensions (e.g., Hatch-Waxman Act in the U.S.) to compensate for regulatory review periods, though such extensions are not guaranteed[77](index=77&type=chunk)[78](index=78&type=chunk) - Trade secret protection and confidentiality agreements are also utilized for proprietary information not amenable to patent protection, though these can be challenging to enforce[80](index=80&type=chunk) [Government Regulations](index=16&type=section&id=Government%20Regulations) - Drug development and commercialization are subject to extensive regulation by authorities like the FDA in the U.S. and EMA in Europe, covering research, testing, approval, manufacturing, and marketing[81](index=81&type=chunk)[132](index=132&type=chunk) - The U.S. regulatory process involves preclinical studies (GLP), IND applications, multi-phase human clinical trials (cGCP), and New Drug Application (NDA) submission and review, with potential for expedited programs like Orphan Drug, Fast Track, Breakthrough Therapy, and Accelerated Approval[82](index=82&type=chunk)[84](index=84&type=chunk)[86](index=86&type=chunk)[88](index=88&type=chunk)[96](index=96&type=chunk)[105](index=105&type=chunk)[110](index=110&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) - In the EU, clinical trials are governed by the Clinical Trials Regulation (CTR), and marketing authorization requires compliance with EMA procedures, with provisions for data and market exclusivity (e.g., **8+2 years** for New Chemical Entities) and Orphan

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) This section presents Rain Therapeutics Inc.'s unaudited condensed consolidated financial statements and comprehensive notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20September%2030%2C%202022%20%28Unaudited%29%20and%20December%2031%2C%202021) | Metric | September 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :-------------------------------- | :--------------------------------- | | Total Assets | $94,635 | $147,140 | | Total Liabilities | $13,226 | $16,636 | | Total Stockholders' Equity | $81,409 | $130,504 | | Cash and cash equivalents | $39,834 | $24,780 | | Short-term investments | $50,874 | $115,438 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss%20%28Unaudited%29%20for%20the%20three%20and%20nine%20months%20ended%20September%2030%2C%202022%20and%202021) | Metric | 3 Months Ended Sep 30, 2022 (in thousands) | 3 Months Ended Sep 30, 2021 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | 9 Months Ended Sep 30, 2021 (in thousands) | | :----------------------------------- | :----------------------------------- | :----------------------------------- | :----------------------------------- | :----------------------------------- | | Research and development | $14,510 | $15,284 | $42,322 | $26,101 | | General and administrative | $3,901 | $3,154 | $11,257 | $7,334 | | Total operating expenses | $18,411 | $18,438 | $53,579 | $33,435 | | Net loss | $(18,041) | $(18,426) | $(53,046) | $(33,409) | | Net loss per share, basic and diluted | $(0.68) | $(0.70) | $(2.00) | $(1.96) | [Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Convertible%20Preferred%20Stock%20and%20Stockholders%27%20Equity%20%28Deficit%29%20%28Unaudited%29%20for%20the%20three%20and%20nine%20months%20ended%20September%2030%2C%202022%20and%202021) | Metric | As of September 30, 2022 (in thousands) | As of September 30, 2021 (in thousands) | | :-------------------------- | :------------------------------------ | :------------------------------------ | | Total Stockholders' Equity | $81,409 | $147,275 | | Additional Paid-in Capital | $224,694 | $219,222 | | Accumulated Deficit | $(143,010) | $(71,979) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%28Unaudited%29%20for%20the%20nine%20months%20ended%20September%2030%2C%202022%20and%202021) | Cash Flow Activity | 9 Months Ended Sep 30, 2022 (in thousands) | 9 Months Ended Sep 30, 2021 (in thousands) | | :----------------------------------- | :----------------------------------- | :----------------------------------- | | Net cash used in operating activities | $(49,905) | $(27,704) | | Net cash provided by (used in) investing activities | $64,386 | $(139,480) | | Net cash provided by financing activities | $573 | $121,579 | | Net increase (decrease) in cash and cash equivalents | $15,054 | $(45,605) | | Cash and cash equivalents at end of period | $39,834 | $13,258 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) [Note 1 – Organization and Nature of Operations](index=7&type=section&id=Note%201%20%E2%80%93%20Organization%20and%20Nature%20of%20Operations) - Rain Therapeutics Inc. is a late-stage precision oncology company developing therapies targeting oncogenic drivers, with milademetan as its lead product candidate[16](index=16&type=chunk) - The company completed its Initial Public Offering (IPO) on April 27, 2021, generating **$121.5 million in net proceeds**[18](index=18&type=chunk) - Rain has incurred **net losses** and negative **cash flows** since inception, with an **accumulated deficit of $143.0 million** as of September 30, 2022[21](index=21&type=chunk)[109](index=109&type=chunk) - Management believes current **cash**, **cash equivalents**, and **short-term investments** will provide sufficient funds for at least **twelve months** from the filing date[23](index=23&type=chunk) [Note 2 – Summary of Significant Accounting Policies](index=9&type=section&id=Note%202%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) - The condensed consolidated financial statements are prepared in accordance with GAAP, requiring management to make estimates, particularly for clinical trial expense accruals[20](index=20&type=chunk)[24](index=24&type=chunk) - **Cash equivalents** are highly liquid investments with original maturities of **three months** or less; available-for-sale (AFS) securities are classified as current assets and carried at fair value[25](index=25&type=chunk)[26](index=26&type=chunk) - **Research and development costs** are expensed as incurred, and **stock-based compensation expense** is recognized over the service period using the Black-Scholes model for options and closing stock price for RSUs[30](index=30&type=chunk)[32](index=32&type=chunk) - The company adopted ASU 2019-12 (Simplifying the Accounting for Income Taxes) effective January 1, 2022, with no material impact, and anticipates no significant impact from ASU 2016-13 (Financial Instruments—Credit Losses) effective January 1, 2023[36](index=36&type=chunk)[41](index=41&type=chunk) [Note 3 – Fair Value Measurements](index=13&type=section&id=Note%203%20%E2%80%93%20Fair%20Value%20Measurements) - Fair value is defined as an exit price, measured using a three-tier hierarchy: Level 1 (unadjusted quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[43](index=43&type=chunk) | Category | Level 1 (in thousands) | Level 2 (in thousands) | Total (in thousands) | | :----------------------------------- | :--------------------- | :--------------------- | :------------------- | | Money market funds | $7,874 | $— | $7,874 | | Commercial paper | $— | $44,774 | $44,774 | | U.S. government securities | $20,080 | $— | $20,080 | | U.S. agency bonds | $— | $16,167 | $16,167 | | Corporate debt securities | $— | $992 | $992 | | **Total cash equivalents and short-term investments** | **$27,954** | **$61,933** | **$89,887** | [Note 4 – Investments](index=15&type=section&id=Note%204%20%E2%80%93%20Investments) - The company holds investment grade securities classified as available-for-sale (AFS), including money market funds, commercial paper, corporate debt securities, U.S. government securities, and U.S. agency bonds[26](index=26&type=chunk)[48](index=48&type=chunk) - All AFS securities are classified as current assets, reflecting management's intent to use proceeds for operations as needed[26](index=26&type=chunk)[51](index=51&type=chunk) - As of September 30, 2022, **$66.4 million** of marketable securities were in **gross unrealized loss positions**, none for greater than **12 months**, and these losses were determined not to be other-than-temporary[51](index=51&type=chunk)[52](index=52&

PART I. FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements of Rain Therapeutics Inc. for the periods ended June 30, 2022, and December 31, 2021, including balance sheets, statements of operations and comprehensive loss, statements of convertible preferred stock and stockholders' equity (deficit), statements of cash flows, and accompanying notes detailing the company's organization, accounting policies, fair value measurements, investments, and other financial disclosures [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202022%20(Unaudited)%20and%20December%2031%2C%202021) The company's total assets decreased by 24.79% from December 31, 2021, to June 30, 2022, primarily due to a significant reduction in short-term investments. Total liabilities also decreased, leading to a corresponding decline in total stockholders' equity | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :--------- | | Total Assets | $110,663 | $147,140 | $(36,477) | -24.79% | | Total Liabilities | $12,378 | $16,636 | $(4,258) | -25.60% | | Total Stockholders' Equity | $98,285 | $130,504 | $(32,219) | -24.69% | | Cash and cash equivalents | $43,409 | $24,780 | $18,629 | 75.18% | | Short-term investments | $62,344 | $115,438 | $(53,094) | -46.00% | | Accumulated deficit | $(124,969) | $(89,964) | $(35,005) | 38.91% | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss%20(Unaudited)%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202022%20and%202021) Rain Therapeutics Inc. experienced a substantial increase in net loss for both the three and six months ended June 30, 2022, compared to the prior year, primarily driven by significant increases in research and development and general and administrative expenses | Metric | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | Change (in thousands) | % Change | | :------------------------------------ | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Research and development | $14,257 | $5,489 | $8,768 | 159.75% | | General and administrative | $3,461 | $2,700 | $761 | 28.19% | | Total operating expenses | $17,718 | $8,189 | $9,529 | 116.36% | | Net loss | $(17,611) | $(8,183) | $(9,428) | 115.22% | | Net loss per share, basic and diluted | $(0.66) | $(0.39) | $(0.27) | 69.23% | | Metric | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | Change (in thousands) | % Change | | :------------------------------------ | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Research and development | $27,812 | $10,817 | $16,995 | 157.11% | | General and administrative | $7,356 | $4,180 | $3,176 | 76.00% | | Total operating expenses | $35,168 | $14,997 | $20,171 | 134.50% | | Net loss | $(35,005) | $(14,983) | $(20,022) | 133.63% | | Net loss per share, basic and diluted | $(1.32) | $(1.23) | $(0.09) | 7.32% | [Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Convertible%20Preferred%20Stock%20and%20Stockholders%27%20Equity%20(Deficit)%20(Unaudited)%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202022%20and%202021) Stockholders' equity decreased by $32.22 million from December 31, 2021, to June 30, 2022, primarily due to the net loss incurred during the period and unrealized losses on investments, partially offset by increases in additional paid-in capital from stock option exercises and stock-based compensation | Metric | December 31, 2021 (in thousands) | June 30, 2022 (in thousands) | Change (in thousands) | | :-------------------------------- | :------------------------------- | :----------------------------- | :-------------------- | | Total Stockholders' Equity | $130,504 | $98,285 | $(32,219) | | Additional Paid-in Capital | $220,530 | $223,600 | $3,070 | | Accumulated Deficit | $(89,964) | $(124,969) | $(35,005) | | Accumulated Other Comprehensive Loss | $(89) | $(373) | $(284) | - Net loss for the six months ended June 30, 2022, was **$(35,005) thousand**, contributing to the decrease in stockholders' equity[14](index=14&type=chunk) - Stock-based compensation expense of **$2,659 thousand** and proceeds from stock option exercises contributed to the increase in additional paid-in capital[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)%20for%20the%20six%20months%20ended%20June%2030%2C%202022%20and%202021) For the six months ended June 30, 2022, net cash used in operating activities increased significantly, while investing activities provided substantial cash due to maturities of short-term investments. Financing activities provided minimal cash compared to the prior year's IPO-driven inflow | Metric | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | Change (in thousands) | | :------------------------------------ | :------------------------------------------ | :------------------------------------------ | :-------------------- | | Net cash used in operating activities | $(34,542) | $(15,750) | $(18,792) | | Net cash provided by (used in) investing activities | $52,760 | $(46,679) | $99,439 | | Net cash provided by financing activities | $411 | $121,579 | $(121,168) | | Net increase in cash and cash equivalents | $18,629 | $59,150 | $(40,521) | | Cash and cash equivalents at end of period | $43,409 | $118,013 | $(74,604) | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) These notes provide detailed explanations of the company's financial statements, covering its business operations, significant accounting policies, fair value measurements, investment portfolio, equity structure, license agreements, commitments, employee benefits, and net loss per share calculations. They also address the impact of the COVID-19 pandemic and recent accounting pronouncements [Note 1 – Organization and Nature of Operations](index=8&type=section&id=Note%201%20%E2%80%93%20Organization%20and%20Nature%20of%20Operations) Rain Therapeutics Inc. is a late-stage precision oncology company focused on developing therapies for oncogenic drivers, with its lead product candidate milademetan and a preclinical program for RAD52 inhibitors. The company formed a wholly-owned Australian subsidiary in June 2022 and completed its IPO in April 2021, raising $121.5 million net proceeds. It has incurred significant operating losses since inception and expects to continue to do so, funding operations through IPO proceeds and prior convertible notes/preferred stock, with current capital believed sufficient for at least the next twelve months - Rain Therapeutics Inc. is a late-stage precision oncology company developing therapies that target oncogenic drivers, utilizing a tumor-agnostic strategy[18](index=18&type=chunk) - The lead product candidate is milademetan, an oral inhibitor of mouse double minute 2 (MDM2), and a preclinical program focuses on inhibiting RAD52[18](index=18&type=chunk) - The company completed its initial public offering (IPO) on April 27, 2021, generating **$121.5 million** in net proceeds[20](index=20&type=chunk) - As of June 30, 2022, the company had an accumulated deficit of **$124.97 million** and expects to continue incurring net losses[23](index=23&type=chunk)[25](index=25&type=chunk) - Management believes current cash, cash equivalents, and short-term investments will provide sufficient funds for at least twelve months from the filing date[26](index=26&type=chunk) [Note 2 – Summary of Significant Accounting Policies](index=10&type=section&id=Note%202%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) This note details the company's accounting policies, including the use of estimates (particularly for clinical trial accruals), classification of cash and cash equivalents, available-for-sale investments, deferred offering costs, expensing of research and development costs, stock-based compensation, income taxes, comprehensive loss, and net loss per share. It also notes that the COVID-19 pandemic has not had a material impact to date and discusses recent accounting pronouncements - The most significant estimate in the financial statements relates to clinical trial expense accruals[27](index=27&type=chunk) - Research and development costs are expensed as incurred[34](index=34&type=chunk) - Stock-based compensation expense is recognized over the requisite service period using the Black-Scholes option pricing model[36](index=36&type=chunk) - Comprehensive loss includes unrealized gains/losses from short-term investments[42](index=42&type=chunk) - The COVID-19 pandemic has not had a material impact on the company's expenditures to date[44](index=44&type=chunk) [Note 3 – Fair Value Measurements](index=14&type=section&id=Note%203%20%E2%80%93%20Fair%20Value%20Measurements) The company categorizes its financial assets measured at fair value into a three-tier hierarchy. As of June 30, 2022, money market funds and U.S. government securities are classified as Level 1, while commercial paper, U.S. agency bonds, and corporate debt securities are classified as Level 2 - Fair value measurements are categorized into a three-tier hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs)[52](index=52&type=chunk) | Category | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | Total (in thousands) | | :------------------------------------ | :--------------------- | :--------------------- | :--------------------- | :------------------- | | **As of June 30, 2022:** | | | | | | Money market funds | $11,870 | $— | $— | $11,870 | | Commercial paper | $— | $56,276 | $— | $56,276 | | U.S. government securities | $25,036 | $— | $— | $25,036 | | U.S. agency bonds | $— | $9,435 | $— | $9,435 | | Corporate debt securities | $— | $1,992 | $— | $1,992 | | **Total cash equivalents and short-term investments** | **$36,906** | **$67,703** | **$—** | **$104,609** | [Note 4 – Investments](index=18&type=section&id=Note%204%20%E2%80%93%20Investments) This note provides a detailed breakdown of the company's cash equivalents and available-for-sale (AFS) investments, including their amortized cost, unrealized gains/losses, and fair value. It also outlines the contractual maturities of AFS securities and confirms that unrealized losses were not considered other-than-temporary - Investments in money market funds and U.S. government securities are classified as Level 1, while commercial paper, corporate debt securities, and U.S. agency bonds are Level 2[54](index=54&type=chunk)[55](index=55&type=chunk) | Type | Amortized Cost (June 30, 2022, in thousands) | Unrealized Gains (June 30, 2022, in thousands) | Unrealized Losses (June 30, 2022, in thousands) | Estimated Fair Value (June 30, 2022, in thousands) | | :------------------------ | :--------------------------------------- | :--------------------------------------- | :---------------------------------------- | :----------------------------------------- | | Money market funds | $11,870 | $— | $— | $11,870 | | Commercial paper | $56,312 | $7 | $(43) | $56,276 | | U.S. government securities | $25,283 | $— | $(247) | $25,036 | | U.S. agency bonds | $9,507 | $— | $(72) | $9,435 | | Corporate debt securities | $2,010 | $— | $(18) | $1,992 | | **Cash equivalents and investments** | **$104,982** | **$7** | **$(380)** | **$104,609** | - Contractual maturities of AFS securities due within one year decreased from **$105.17 million** at December 31, 2021, to **$62.34 million** at June 30, 2022[56](index=56&type=chunk) - As of June 30, 2022, **$92.7 million** of marketable securities were in gross unrealized loss positions, none of which were considered other-than-temporary[56](index=56&type=chunk)[57](index=57&type=chunk) [Note 5 - Condensed Consolidated Balance Sheet Details](index=20&type=section&id=Note%205%20-%20Condensed%20Consolidated%20Balance%20Sheet%20Details) This note provides a breakdown of specific balance sheet items, including prepaid and other current assets, property and equipment (net), and other non-current assets, showing changes between December 31, 2021, and June 30, 2022 | Item | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------------------ | :--------------------------- | :------------------------------- | | Prepaid insurance | $2,160 | $827 | | Prepaid research | $1,099 | $4,329 | | Prepaid and other current assets | $3,856 | $5,928 | - Property and equipment, net, decreased from **$165 thousand** at December 31, 2021, to **$121 thousand** at June 30, 2022[58](index=58&type=chunk) - Depreciation expense for the six months ended June 30, 2022, was **$44 thousand**, an increase from **$29 thousand** in the prior year[58](index=58&type=chunk) [Note 6 – Convertible Preferred Stock and Stockholders' Equity](index=20&type=section&id=Note%206%20%E2%80%93%20Convertible%20Preferred%20Stock%20and%20Stockholders%27%20Equity) This note details the company's capital structure, including common stock (voting and non-voting), the conversion of preferred stock during the IPO, and the equity incentive plans (2021 Plan and ESPP). It also provides a summary of stock option activities and stock-based compensation expenses, noting a significant increase in options granted and compensation expense - The company's capital stock includes **250,000,000** authorized shares of common stock (voting and non-voting) and **10,000,000** shares of undesignated preferred stock[60](index=60&type=chunk) - Non-Voting Common Stock can be converted to Voting Common Stock, subject to a Beneficial Ownership Limitation (initially **9.99%**)[61](index=61&type=chunk) - No convertible preferred stock was outstanding as of June 30, 2022, following conversions during the IPO[70](index=70&type=chunk) | Metric | Total Options | Weighted-Average Exercise Price Per Share | | :-------------------------------- | :------------ | :-------------------------------------- | | Outstanding as of Dec 31, 2021 | 1,734,696 | $8.50 | | Granted | 889,952 | $8.80 | | Exercised | (27,262) | $4.30 | | Forfeited or cancelled | (194,514) | $11.20 | | Outstanding as of June 30, 2022 | 2,402,872 | $8.44 | | Category | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :-------------------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Research and development | $1,203 | $634 | $2,093 | $768 | | General and administrative | $214 | $159 | $566 | $190 | | **Total stock-based compensation expense** | **$1,417** | **$793** | **$2,659** | **$958** | - Unrecognized compensation cost related to outstanding options was **$12 million** as of June 30, 2022, expected to be recognized over approximately **3.0 years**[76](index=76&type=chunk) [Note 7 – License Agreements](index=29&type=section&id=Note%207%20%E2%80%93%20License%20Agreements) The company holds license agreements for milademetan (from Daiichi Sankyo) and RAD52 inhibitors (from Drexel University), involving upfront payments, potential milestone payments, and royalties. An amendment to the Daiichi Sankyo agreement in June 2022 reduced a milestone fee liability by $1.0 million - Under the Daiichi Sankyo License Agreement for milademetan, the company made an initial upfront payment of **$5.0 million** in September 2020[85](index=85&type=chunk) - The company is required to make aggregate future milestone payments of up to **$223.5 million** to Daiichi Sankyo, contingent on development, regulatory, and sales milestones[89](index=89&type=chunk) - An amendment to the Daiichi Sankyo License Agreement on June 29, 2022, reduced a **$3.0 million** milestone fee liability to **$2.0 million**, resulting in a **$1.0 million** reduction in research and development expense for the three and six months ended June 30, 2022[89](index=89&type=chunk) - Under the Drexel License Agreement for RAD52 inhibitors, the company is obligated to make payments up to **$6.25 million** for development milestones and pay low single-digit royalties on net sales[96](index=96&type=chunk) - The company entered into a clinical supply agreement with Roche in December 2021 for atezolizumab, with no financial commitments, to evaluate milademetan in combination with atezolizumab[102](index=102&type=chunk) [Note 8 – Commitments and Contingencies](index=35&type=section&id=Note%208%20%E2%80%93%20Commitments%20and%20Contingencies) The company has a noncancelable operating lease for its corporate headquarters, which was amended in June 2020 to extend the term to September 2024. Future minimum lease payments total $384 thousand as of June 30, 2022 - The company has a noncancelable operating lease for its corporate headquarters in Newark, California, with a term ending in September 2024[103](index=103&type=chunk)[104](index=104&type=chunk) | Year | As of June 30, 2022 (in thousands) | | :--- | :--------------------------------- | | 2022 (remainder) | $84 | | 2023 | $171 | | 2024 | $129 | | **Total minimum lease payments** | **$384** | - Total operating lease expense was **$40 thousand** for the three months ended June 30, 2022, and **$80 thousand** for the six months ended June 30, 2022[106](index=106&type=chunk) [Note 9 – Employee Benefits](index=36&type=section&id=Note%209%20%E2%80%93%20Employee%20Benefits) The company offers a defined contribution 401(k) plan to eligible employees and made matching contributions of $156 thousand for the six months ended June 30, 2022 - The company made matching contributions of **$156 thousand** to its 401(k) plan for the six months ended June 30, 2022[108](index=108&type=chunk) [Note 10 – Net Loss Per Share](index=36&type=section&id=Note%2010%20%E2%80%93%20Net%20Loss%20Per%20Share) Basic and diluted net loss per share were $(0.66) for the three months ended June 30, 2022, and $(1.32) for the six months ended June 30, 2022. Potentially dilutive securities, including stock options and ESPP shares, were excluded from the diluted EPS calculation as their inclusion would be anti-dilutive due to the company's net loss position | Period | Net Loss Per Share (Basic and Diluted) | Weighted-Average Shares Outstanding | | :--------------------------- | :------------------------------------- | :-------------------------------- | | 3 Months Ended June 30, 2022 | $(0.66) | 26,529,482 | | 6 Months Ended June 30, 2022 | $(1.32) | 26,520,662 | - Potentially dilutive securities, including stock options and ESPP shares, were excluded from the diluted net loss per share calculation because their effect would be anti-dilutive[43](index=43&type=chunk)[109](index=109&type=chunk) - Total anti-dilutive securities as of June 30, 2022, amounted to **2,456,138 shares**[109](index=109&type=chunk) [Note 11 – Subsequent Events](index=37&type=section&id=Note%2011%20%E2%80%93%20Subsequent%20Events) The company has evaluated events occurring after June 30, 2022, and determined that no additional material subsequent events require disclosure in the condensed consolidated financial statements - No additional material subsequent events were identified after June 30, 2022, that require disclosure[110](index=110&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and operational results, highlighting its precision oncology focus, lead product candidate milademetan's clinical progress, and the preclinical RAD52 program. It discusses the company's significant operating losses, liquidity, future funding requirements, and the impact of the COVID-19 pandemic, along with detailed comparisons of operating expenses and cash flows [Overview](index=38&type=section&id=Overview) Rain Therapeutics is a late-stage precision oncology company developing therapies for genetically selected patients. Its lead candidate, milademetan, is in pivotal Phase 3 trials for liposarcoma (LPS) and Phase 2 for other solid tumors, with additional trials planned. The company has incurred significant operating losses since inception, with an accumulated deficit of $125.0 million as of June 30, 2022, and expects to require additional capital for future R&D - Rain Therapeutics is a late-stage precision oncology company focused on developing therapies that target oncogenic drivers[113](index=113&type=chunk) - Milademetan, the lead product candidate, is an oral MDM2-p53 complex inhibitor in a pivotal Phase 3 trial for LPS and a Phase 2 tumor-agnostic basket trial[114](index=114&type=chunk) - As of June 30, 2022, the company had an accumulated deficit of **$125.0 million** and incurred net losses of **$17.6 million** (Q2 2022) and **$35.0 million** (YTD 2022)[115](index=115&type=chunk) - Cash, cash equivalents, and short-term investments totaled **$105.8 million** as of June 30, 2022, believed to be sufficient for at least the next twelve months, but additional capital will be required[115](index=115&type=chunk) [COVID-19](index=40&type=section&id=COVID-19) The COVID-19 pandemic's ultimate impact on the company's business, operations, and clinical development timelines remains uncertain, though it has not negatively impacted productivity or data integrity to date. The company continues to monitor developments and potential effects on regulatory activities and financial markets - The extent of the COVID-19 pandemic's impact on business, operations, and clinical development timelines remains uncertain[119](index=119&type=chunk) - To date, COVID-19 has not negatively impacted productivity, subject data, or clinical trial endpoints[119](index=119&type=chunk) - The ability to raise additional capital may be adversely impacted by potential worsening global economic conditions due to the pandemic[119](index=119&type=chunk) [Recent Developments](index=40&type=section&id=Recent%20Developments) In August 2022, Rain Therapeutics Inc. announced the completion of enrollment for its MANTRA Phase 3 randomized, global, registrational trial of milademetan, enrolling 175 patients five months ahead of previous guidance - Completed enrollment into the MANTRA Phase 3 randomized, global, registrational trial of milademetan in August 2022[120](index=120&type=chunk) - The trial enrolled **175 patients**, five months ahead of previous guidance[120](index=120&type=chunk) [Our Development Pipeline](index=42&type=section&id=Our%20Development%20Pipeline) The company's development pipeline focuses on targeting oncogenic drivers in genetically selected patients. Milademetan, the lead candidate, is an MDM2 inhibitor with a differentiated dosing schedule, currently in Phase 3 for de-differentiated liposarcoma (DD LPS), Phase 2 for MDM2-amplified solid tumors, and with planned Phase 2 and Phase 1/2 combination trials. The preclinical RAD52 program targets DNA damage repair in HRD+ tumors - The development pipeline is unified by a strategy to target oncogenic drivers through differentiated therapies for genetically selected patients[121](index=121&type=chunk) - Milademetan, a potent MDM2 inhibitor, utilizes a rationally designed dosing schedule to potentially reduce toxicities while preserving activity[122](index=122&type=chunk) - The MANTRA Phase 3 trial for DD LPS completed enrollment with **175 patients**, with top-line data anticipated in the first half of 2023[123](index=123&type=chunk)[124](index=124&type=chunk)[130](index=130&type=chunk) - A Phase 2 tumor-agnostic basket trial (MANTRA-2) for MDM2-amplified advanced solid tumors is underway, with an interim analysis anticipated in Q4 2022[127](index=127&type=chunk) - Planned Phase 2 (MANTRA-3) for Merkel cell carcinoma and Phase 1/2 combination (MANTRA-4) with atezolizumab are on track to commence in Q4 2022[128](index=128&type=chunk)[129](index=129&type=chunk) - The preclinical RAD52 program is in the lead optimization stage, targeting HRD+ tumors (e.g., BRCA1/2 mutations) as monotherapy or in combination with PARP inhibitors[131](index=131&type=chunk)[133](index=133&type=chunk) [Milademetan and p53 Overview](index=46&type=section&id=Milademetan%20and%20p53%20Overview) Milademetan reactivates p53, the 'guardian of the genome,' by inhibiting MDM2, which typically suppresses p53. This mechanism is critical for inducing cancer cell cycle arrest or apoptosis in tumors characterized by wild-type p53 and MDM2 overexpression - Milademetan reactivates p53 by inhibiting MDM2, preventing the formation of the MDM2-p53 complex[134](index=134&type=chunk)[135](index=135&type=chunk) - This mechanism triggers cancer cell cycle arrest or apoptosis in tumor cells with wild-type p53 and MDM2 overexpression[135](index=135&type=chunk) [Collaboration and License Agreements](index=46&type=section&id=Collaboration%20and%20License%20Agreements) The company is party to several license agreements for its in-licensed product candidates and development programs, with further details provided in Note 7 to the Condensed Consolidated Financial Statements - The company is party to a number of license agreements for the in-license of its product candidates and development programs[136](index=136&type=chunk) - Further details regarding these agreements are provided in Note 7 to the Condensed Consolidated Financial Statements[136](index=136&type=chunk) [Components of Our Results of Operations](index=46&type=section&id=Components%20of%20Our%20Results%20of%20Operations) The company has not generated any product revenue to date and does not anticipate doing so in the foreseeable future. Operating expenses consist solely of research and development (R&D) and general and administrative (G&A) costs, with R&D expenses recognized as incurred and including various costs related to drug discovery, clinical development, and regulatory compliance - The company has not generated any revenue from product sales, licenses, or collaborations to date and does not expect to in the foreseeable future[137](index=137&type=chunk) - Operating expenses consist solely of research and development (R&D) costs and general and administrative (G&A) costs[138](index=138&type=chunk) - R&D expenses are recognized as incurred and include salaries, preclinical/clinical study expenses, CRO fees, regulatory costs, license fees, and milestone payments[139](index=139&type=chunk)[140](index=140&type=chunk) - G&A expenses include salaries, legal fees, professional fees, and facility-related costs[144](index=144&type=chunk) [Results of Operations](index=50&type=section&id=Results%20of%20Operations) Operating expenses significantly increased for both the three and six months ended June 30, 2022, compared to 2021, primarily driven by higher R&D costs for milademetan and increased G&A expenses due to payroll, legal, and public company costs. Consequently, the net loss widened, while interest income saw an increase | Metric | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | Change (in thousands) | | :-------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | | Research and development | $14,257 | $5,489 | $8,768 | | General and administrative | $3,461 | $2,700 | $761 | | **Total Operating Expenses** | **$17,718** | **$8,189** | **$9,529** | | Net loss | $(17,611) | $(8,183) | $(9,428) | | Metric | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | Change (in thousands) | | :-------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | | Research and development | $27,812 | $10,817 | $16,995 | | General and administrative | $7,356 | $4,180 | $3,176 | | **Total Operating Expenses** | **$35,168** | **$14,997** | **$20,171** | | Net loss | $(35,005) | $(14,983) | $(20,022) | - The increase in R&D expenses was primarily related to milademetan and other research costs, partially offset by a **$1.0 million** decrease in milestone payment liability[147](index=147&type=chunk)[148](index=148&type=chunk) - The increase in G&A expenses was mainly due to higher payroll-related costs, legal costs, directors and officers insurance, professional services, and other public company operating expenses[149](index=149&type=chunk)[150](index=150&type=chunk) - Interest income increased due to higher interest on money market accounts and short-term investments[145](index=145&type=chunk)[151](index=151&type=chunk) [Liquidity and Capital Resources](index=52&type=section&id=Liquidity%20and%20Capital%20Resources) The company has incurred significant operating losses and expects this trend to continue, necessitating additional capital. Operations have been financed through convertible notes, preferred stock, and a $121.5 million IPO in April 2021. As of June 30, 2022, cash, cash equivalents, and short-term investments were $105.8 million, estimated to be sufficient for at least the next twelve months, but additional funding will be required for ongoing R&D - The company has incurred significant operating losses since inception and expects to continue to incur substantial expenses and operating losses[152](index=152&type=chunk) - Operations have been financed through **$9.9 million** from convertible promissory notes, **$81.9 million** from convertible preferred stock, and **$121.5 million** net proceeds from the April 2021 IPO[153](index=153&type=chunk)[155](index=155&type=chunk) - As of June 30, 2022, cash, cash equivalents, and short-term investments totaled **$105.8 million**[156](index=156&type=chunk) - Existing capital is believed to be sufficient for at least the next twelve months, but additional capital will be required for future research and development[156](index=156&type=chunk) - The company entered into an 'at-the-market' (ATM) facility in May 2022 to sell up to **$50.0 million** of common stock, with no sales made as of June 30, 2022[154](index=154&type=chunk) [Future Funding Requirements](index=52&type=section&id=Future%20Funding%20Requirements) The company anticipates substantial increases in expenses for ongoing development of milademetan and other product candidates, as well as costs associated with operating as a public company. Future capital needs are highly dependent on clinical trial progress, regulatory approvals, commercialization efforts, and intellectual property maintenance, requiring substantial additional funds likely through equity/debt offerings or collaborations - Expenses are expected to increase substantially due to ongoing development activities for milademetan and other product candidates, and costs associated with operating as a public company[157](index=157&type=chunk) - Future capital requirements depend on factors such as the scope, progress, results, and costs of clinical trials, regulatory review, commercialization activities, and intellectual property maintenance[160](index=160&type=chunk)[161](index=161&type=chunk) - The company will need to obtain substantial additional funds to achieve its business objectives, likely through public or private equity offerings, debt financings, or strategic collaborations[162](index=162&type=chunk)[163](index=163&type=chunk) [Cash Flows](index=56&type=section&id=Cash%20Flows) Net cash used in operating activities significantly increased to $34.5 million for the six months ended June 30, 2022, primarily due to net loss. Investing activities provided $52.8 million, mainly from maturities of short-term investments. Financing activities provided $0.4 million, a sharp decrease from $121.6 million in 2021 due to the IPO | Activity | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :------------------------ | :------------------------------------------ | :------------------------------------------ | | Operating activities | $(34,542) | $(15,750) | | Investing activities | $52,760 | $(46,679) | | Financing activities | $411 | $121,579 | | **Net increase in cash and cash equivalents** | **$18,629** | **$59,150** | - Net cash used in operating activities for the six months ended June 30, 2022, was **$34.5 million**, primarily due to a net loss of **$35.0 million**[165](index=165&type=chunk) - Net cash provided by investing activities was **$52.8 million**, mainly from **$69.9 million** in maturities of short-term investments, partially offset by **$17.1 million** in purchases[167](index=167&type=chunk) - Net cash provided by financing activities was **$0.4 million**, primarily from option exercises, a significant decrease from **$121.6 million** in 2021 due to IPO proceeds[169](index=169&type=chunk) [Obligations and other Commitments](index=57&type=section&id=Obligations%20and%20other%20Commitments) The company has commitments under license agreements for potential milestone and royalty payments, which are not estimable or cancelable. It also enters into cancelable contracts with CROs and vendors for R&D. Accrued research and development obligations were $5.8 million as of June 30, 2022 - License agreements may require future milestone and royalty payments, which are not estimable and are cancelable by the company[170](index=170&type=chunk) - The company enters into cancelable contracts with CROs and other vendors for preclinical studies and clinical trials[171](index=171&type=chunk) - Accrued research and development obligations were **$5.8 million** as of June 30, 2022, an increase from **$4.3 million** at December 31, 2021[171](index=171&type=chunk) [Critical Accounting Policies and Use of Estimates](index=57&type=section&id=Critical%20Accounting%20Policies%20and%20Use%20of%20Estimates) No significant changes to the company's critical accounting policies and use of estimates were reported from the prior annual report, except as described in Note 2 of the interim unaudited condensed consolidated financial statements - No significant changes to critical accounting policies and use of estimates from the Annual Report on Form 10-K for the year ended December 31, 2021, except as disclosed in Note 2[173](index=173&type=chunk) [Accrued Liabilities](index=57&type=section&id=Accrued%20Liabilities) The company estimates expenses for preclinical and clinical trial obligations under contracts with vendors and CROs. Accrued research and development liabilities increased to $5.8 million, while other accrued liabilities decreased to $4.1 million as of June 30, 2022 - The company estimates expenses for obligations under contracts with vendors, consultants, CROs, and clinical site agreements[174](index=174&type=chunk) - Accrued research and development balances were **$5.8 million** as of June 30, 2022, compared to **$4.3 million** as of December 31, 2021[175](index=175&type=chunk) - Other accrued liabilities balances were **$4.1 million** as of June 30, 2022, compared to **$5.7 million** as of December 31, 2021[175](index=175&type=chunk) [Stock-Based Compensation](index=59&type=section&id=Stock-Based%20Compensation) The company recognizes stock-based compensation expense using the Black-Scholes option pricing model. Unrecognized compensation cost related to outstanding options was $12.0 million as of June 30, 2022, expected to be recognized over approximately 3.0 years - The company estimates the fair value of stock options using the Black-Scholes option pricing model[177](index=177&type=chunk) - Stock-based compensation expense for the three months ended June 30, 2022, was **$1.4 million**, compared to **$0.8 million** in the prior year[178](index=178&type=chunk) - Unvested equity compensation costs not yet recognized were **$12.0 million** as of June 30, 2022, expected to be recognized over approximately **3.0 years**[179](index=179&type=chunk) [Recent Accounting Pronouncements](index=59&type=section&id=Recent%20Accounting%20Pronouncements) A description of recent accounting pronouncements that may potentially impact the company's financial position, results of operations, or cash flows is disclosed in Note 2 to the unaudited condensed consolidated financial statements - Refer to Note 2 for a description of recent accounting pronouncements and their potential impact[180](index=180&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=59&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Rain Therapeutics Inc. is not required to provide specific quantitative and qualitative disclosures about market risk under SEC regulations - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[181](index=181&type=chunk) [Item 4. Controls and Procedures](index=59&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the principal executive and financial officers, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2022. No material changes in internal control over financial reporting were identified during the quarter - Management concluded that disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2022[183](index=183&type=chunk)[185](index=185&type=chunk) - No material changes in internal control over financial reporting were identified during the quarter ended June 30, 2022[186](index=186&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=62&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings during the period - No legal proceedings were reported[189](index=189&type=chunk) [Item 1A. Risk Factors](index=62&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2021 - No material changes from the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2021[190](index=190&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=62&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - No unregistered sales of equity securities or use of proceeds were reported[191](index=191&type=chunk) [Item 3. Defaults Upon Senior Securities](index=62&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - No defaults upon senior securities were reported[192](index=192&type=chunk) [Item 4. Mine Safety Disclosures](index=62&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reported no mine safety disclosures during the period - No mine safety disclosures were reported[193](index=193&type=chunk) [Item 5. Other Information](index=62&type=section&id=Item%205.%20Other%20Information) The company reported no other information requiring disclosure under this item - No other information was reported under this item[194](index=194&type=chunk) [Item 6. Exhibits](index=63&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed or furnished as part of the Quarterly Report on Form 10-Q, including corporate documents, agreements, certifications, and XBRL data - The exhibits include corporate documents (Certificate of Incorporation, Bylaws), agreements (Sales Agreement, License Agreement Amendment), equity incentive plan forms, and certifications (principal executive and financial officers)[197](index=197&type=chunk) [Signatures](index=65&type=section&id=Signatures) The report is duly signed on behalf of Rain Therapeutics Inc. by Avanish Vellanki, Chairman and Chief Executive Officer, and Nelson Cabatuan, Senior Vice President of Finance and Administration, on August 4, 2022 - The report was signed by Avanish Vellanki (Chairman and CEO) and Nelson Cabatuan (Senior Vice President of Finance and Administration) on August 4, 2022[202](index=202&type=chunk)

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q%20Filing%20Information) This section details the basic filing information for Rain Therapeutics Inc.'s Form 10-Q for Q1 2022, including company and security specifics [Filing Details](index=1&type=section&id=Filing%20Details) This section outlines the essential filing information for Rain Therapeutics Inc.'s Q1 2022 Form 10-Q, covering company, securities, and compliance status - The report is a Quarterly Report (Form 10-Q) for the period ended March 31, 2022[2](index=2&type=chunk) - Rain Therapeutics Inc. is incorporated in Delaware[2](index=2&type=chunk) - Common Stock (RAIN) is registered on The Nasdaq Global Select Market[3](index=3&type=chunk) - The registrant is classified as a Non-accelerated filer, Smaller reporting company, and Emerging growth company[4](index=4&type=chunk) - As of April 28, 2022, **26,529,878 shares of common stock** were outstanding, including **18,802,408 voting** and **7,727,470 non-voting shares**[5](index=5&type=chunk) [PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the unaudited condensed financial statements and management's discussion and analysis for the quarter ended March 31, 2022 [Item 1. Condensed Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Financial%20Statements%20(Unaudited)) This section provides Rain Therapeutics Inc.'s unaudited condensed financial statements for Q1 2022, encompassing balance sheets, income statements, equity, cash flows, and notes [Condensed Balance Sheets as of March 31, 2022 and December 31, 2021](index=3&type=section&id=Condensed%20Balance%20Sheets) This section presents the condensed balance sheets, highlighting key asset, liability, and equity changes between December 31, 2021, and March 31, 2022 | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | Change (vs. Dec 31, 2021) (in thousands) | | :-------------------------------- | :--------------- | :---------------- | :------------------------ | | Cash and cash equivalents | $21,505 | $24,780 | $(3,275) | | Short-term investments | $101,668 | $115,438 | $(13,770) | | Total current assets | $126,831 | $146,146 | $(19,315) | | Total assets | $127,778 | $147,140 | $(19,362) | | Total current liabilities | $13,044 | $16,315 | $(3,271) | | Total liabilities | $13,327 | $16,636 | $(3,309) | | Total stockholders' equity | $114,451 | $130,504 | $(16,053) | | Accumulated deficit | $(107,358) | $(89,964) | $(17,394) | [Condensed Statements of Operations and Comprehensive Loss for the three months ended March 31, 2022 and 2021](index=4&type=section&id=Condensed%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section presents the condensed statements of operations and comprehensive loss, detailing financial performance for Q1 2022 and Q1 2021 | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | Change (YoY) (in thousands) | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :------------------- | | Research and development | $13,555 | $5,328 | $8,227 | | General and administrative | $3,895 | $1,480 | $2,415 | | Total operating expenses | $17,450 | $6,808 | $10,642 | | Loss from operations | $(17,450) | $(6,808) | $(10,642) | | Net loss | $(17,394) | $(6,800) | $(10,594) | | Net loss per share, basic and diluted | $(0.66) | $(1.93) | $1.27 | | Comprehensive loss | $(17,694) | $(6,800) | $(10,894) | - The weighted-average shares for net loss per share significantly increased from **3,530,975 in Q1 2021** to **26,511,743 in Q1 2022**, mainly due to the April 2021 IPO[14](index=14&type=chunk) [Condensed Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit) for the three months ended March 31, 2022 and 2021](index=5&type=section&id=Condensed%20Statements%20of%20Convertible%20Preferred%20Stock%20and%20Stockholders%27%20Equity%20(Deficit)) This section details changes in convertible preferred stock and stockholders' equity (deficit) for the three months ended March 31, 2022 and 2021 | Item | Balance as of Dec 31, 2021 (in thousands) | Q1 2022 Activity (in thousands) | Balance as of Mar 31, 2022 (in thousands) | | :-------------------------------- | :------------------------- | :----------------- | :------------------------- | | Common Stock Amount | $27 | $0 | $27 | | Additional Paid-in Capital | $220,530 | $1,639 | $222,171 | | Accumulated Other Comprehensive Loss | $(89) | $(300) | $(389) | | Accumulated Deficit | $(89,964) | $(17,394) | $(107,358) | | Total Stockholders' Equity | $130,504 | $(16,053) | $114,451 | - Key Q1 2022 activities included **$1.242 million in stock-based compensation**, **$106 thousand from stock option exercises**, **$293 thousand from ESPP issuances**, and a **net loss of $17.394 million**[16](index=16&type=chunk) - As of March 31, 2022, no convertible preferred stock was outstanding, following conversion to common stock during the April 2021 IPO[16](index=16&type=chunk)[25](index=25&type=chunk)[67](index=67&type=chunk) [Condensed Statements of Cash Flows for the three months ended March 31, 2022 and 2021](index=6&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) This section presents the condensed statements of cash flows, outlining cash movements from operating, investing, and financing activities for Q1 2022 and Q1 2021 | Activity Type | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | Change (YoY) (in thousands) | | :-------------------------- | :-------------------------------- | :-------------------------------- | :------------------- | | Net cash used in operating activities | $(17,110) | $(4,866) | $(12,244) | | Net cash provided by (used in) investing activities | $13,436 | $(29) | $13,465 | | Net cash provided by (used in) financing activities | $399 | $(858) | $1,257 | | Net decrease in cash and cash equivalents | $(3,275) | $(5,753) | $2,478 | | Cash and cash equivalents at end of period | $21,505 | $53,110 | $(31,605) | - The increase in cash from investing activities in Q1 2022 was primarily due to **$22.95 million in short-term investment maturities**, partially offset by **$9.514 million in new purchases**[19](index=19&type=chunk) [Notes to Condensed Financial Statements (Unaudited)](index=7&type=section&id=Notes%20to%20Condensed%20Financial%20Statements%20(Unaudited)) This section provides detailed notes accompanying the unaudited condensed financial statements, offering further context on accounting policies, fair value, and commitments [Note 1 – Organization and Nature of Operations](index=7&type=section&id=Note%201%20%E2%80%93%20Organization%20and%20Nature%20of%20Operations) Rain Therapeutics Inc. is a late-stage precision oncology company developing milademetan and RAD52 inhibitors, facing significant losses and relying on capital raises - Rain Therapeutics Inc. is a late-stage precision oncology company developing therapies targeting oncogenic drivers via a tumor-agnostic strategy[22](index=22&type=chunk) - The lead product candidate, **milademetan**, is a small molecule, oral inhibitor of mouse double minute 2 (MDM2)[22](index=22&type=chunk) - The company is also developing a preclinical program focused on inhibiting RAD52[22](index=22&type=chunk) - From inception through March 31, 2022, the company incurred net losses and negative cash flows, with an accumulated deficit of **$107.4 million**[28](index=28&type=chunk)[108](index=108&type=chunk) - Operations have been funded primarily through **net proceeds from its April 2021 IPO**, and the issuance of convertible promissory notes and preferred stock[28](index=28&type=chunk) - Management believes current cash, cash equivalents, and short-term investments will provide sufficient funds for at least **twelve months** from the filing date[29](index=29&type=chunk) [Note 2 – Summary of Significant Accounting Policies](index=8&type=section&id=Note%202%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines significant accounting policies for the condensed financial statements, covering estimates, cash, investments, R&D, stock compensation, and net loss per share - The most significant estimate in the condensed financial statements relates to **clinical trial expense accruals**[30](index=30&type=chunk) - Cash equivalents include highly liquid investments with an original maturity of **three months or less**[31](index=31&type=chunk) - Available-for-sale (AFS) securities are carried at fair value, with unrealized gains and losses reported in accumulated other comprehensive loss[33](index=33&type=chunk) - Research and development costs are expensed as incurred[36](index=36&type=chunk) - Stock-based compensation expense is recognized over the requisite service period using the Black-Scholes option pricing model[38](index=38&type=chunk) - Basic and diluted net loss per share are the same because the company's net loss position renders potential dilutive securities anti-dilutive[44](index=44&type=chunk) - To date, **COVID-19 has not materially impacted expenditures**, but future effects remain uncertain[45](index=45&type=chunk)[46](index=46&type=chunk) - The adoption of **ASU 2019-12 did not impact financial statements**, and **ASU 2016-13 (effective January 1, 2023)** is not anticipated to have a significant impact[47](index=47&type=chunk)[48](index=48&type=chunk) [Note 3 – Fair Value Measurements](index=10&type=section&id=Note%203%20%E2%80%93%20Fair%20Value%20Measurements) This note details fair value measurements, classifying financial assets into a three-tier hierarchy, with most cash equivalents and short-term investments using Level 1 or 2 inputs - Fair value hierarchy categorizes inputs as **Level 1 (quoted prices in active markets)**, **Level 2 (observable inputs)**, and **Level 3 (unobservable inputs)**[50](index=50&type=chunk) | Asset Type | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | Total (in thousands) | | :-------------------------- | :------ | :------ | :------ | :------ | | Money market funds | $10,252 | — | — | $10,252 | | Commercial paper | — | $73,558 | — | $73,558 | | U.S. government securities | $27,640 | — | — | $27,640 | | U.S. agency bonds | — | $8,465 | — | $8,465 | | Corporate debt securities | — | $2,001 | — | $2,001 | | **Total** | **$37,892** | **$84,024** | **$—** | **$121,916** | - Money market funds and U.S. government securities are **Level 1**, while commercial paper, corporate debt securities, and U.S. agency bonds are **Level 2**[53](index=53&type=chunk)[54](index=54&type=chunk) [Note 4 – Investments](index=11&type=section&id=Note%204%20%E2%80%93%20Investments) This note details available-for-sale investments, including fair value classification, amortized cost, unrealized gains/losses, and maturities, with losses deemed not other-than-temporary | Investment Type | Amortized Cost (in thousands) | Unrealized Gains (in thousands) | Unrealized Losses (in thousands) | Estimated Fair Value (in thousands) | | :-------------------------- | :------------- | :--------------- | :---------------- | :------------------- | | Money market funds | $10,252 | $— | $— | $10,252 | | Commercial paper | $73,667 | $— | $(108) | $73,559 | | U.S. government securities | $27,838 | $— | $(199) | $27,639 | | U.S. agency bonds | $8,530 | $— | $(65) | $8,465 | | Corporate debt securities | $2,018 | $— | $(17) | $2,001 | | **Cash equivalents and investments** | **$122,305** | **$—** | **$(389)** | **$121,916** | | Maturity | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------- | :--------------- | :---------------- | | Due within one year | $99,446 | $105,173 | | Due within one to two years | $2,222 | $10,265 | | **Total** | **$101,668** | **$115,438** | - As of March 31, 2022, **$111.7 million of marketable securities** were in gross unrealized loss positions, none exceeding 12 months, and deemed not other-than-temporary[55](index=55&type=chunk)[56](index=56&type=chunk) [Note 5 – Condensed Balance Sheet Details](index=12&type=section&id=Note%205%20%E2%80%93%20Condensed%20Balance%20Sheet%20Details) This note details specific balance sheet line items, including prepaid and other current assets, and net property and equipment | Item | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------- | :--------------- | :---------------- | | Prepaid research | $2,971 | $4,329 | | FICA tax credit receivable | $367 | $452 | | Other current assets | $157 | $205 | | Prepaid other | $141 | $96 | | Deposits | $19 | $19 | | Prepaid insurance | $3 | $827 | | **Prepaid and Other Current Assets** | **$3,658** | **$5,928** | | Item | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------- | :--------------- | :---------------- | | Furniture and equipment | $204 | $204 | | Leasehold improvements | $67 | $67 | | Computer equipment | $50 | $50 | | Less: accumulated depreciation and amortization expense | $(179) | $(156) | | **Property and Equipment, net** | **$142** | **$165** | - Depreciation expense for Q1 2022 was **$22 thousand**, compared to **$15 thousand** for Q1 2021[58](index=58&type=chunk) [Note 6 – Convertible Preferred Stock and Stockholders' Equity](index=13&type=section&id=Note%206%20%E2%80%93%20Convertible%20Preferred%20Stock%20and%20Stockholders%27%20Equity) This note details the capital structure, including common stock, preferred stock conversion during IPO, equity incentive plans, and stock-based compensation expense - The company's capital stock includes **250 million authorized common shares** ($0.001 par value), with **200 million voting** and **50 million non-voting shares**[60](index=60&type=chunk) - All Series A and B convertible preferred stock converted to common or non-voting common stock during the April 2021 IPO, leaving **no preferred stock outstanding** as of March 31, 2022[25](index=25&type=chunk)[67](index=67&type=chunk) - The **2021 Equity Incentive Plan** initially reserved **3,246,120 shares**, with a **4.0% annual increase**, adding **1,059,032 shares** on January 1, 2022[70](index=70&type=chunk) - The **Employee Stock Purchase Plan (ESPP)** initially reserved **259,689 shares**, with a **1.0% annual increase**, adding **264,758 shares** on January 1, 2022[72](index=72&type=chunk) | Item | Total Options | Weighted Average Exercise Price Per Share | | :-------------------------------- | :------------ | :-------------------------------------- | | Outstanding as of Dec 31, 2021 | 1,734,696 | $8.50 | | Granted | 699,652 | $10.36 | | Exercised | (24,262) | $4.35 | | Forfeited or cancelled | (109,414) | $9.19 | | **Outstanding as of Mar 31, 2022** | **2,300,672** | **$9.09** | | Item | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Research and development | $889 | $134 | | General and administrative | $353 | $31 | | **Total stock-based compensation expense** | **$1,242** | **$165** | - As of March 31, 2022, unrecognized compensation cost for outstanding options was **$13.9 million** (over 3.3 years) and for ESPP was **$0.3 million** (over 1.3 years)[74](index=74&type=chunk)[75](index=75&type=chunk) [Note 7 – License Agreements](index=18&type=section&id=Note%207%20%E2%80%93%20License%20Agreements) This note details key license agreements for milademetan (Daiichi Sankyo) and RAD52 inhibitors (Drexel), outlining payments, milestones, royalties, and termination clauses - Under the Daiichi Sankyo License Agreement for milademetan, the company paid an initial upfront payment of **$5.0 million** in September 2020[83](index=83&type=chunk) - Future milestone payments under the Daiichi Sankyo License Agreement could aggregate up to **$224.5 million**, contingent on development, regulatory, and sales milestones, including a **$2.0 million increase**[85](index=85&type=chunk) - The company is reimbursing Daiichi Sankyo **$2.0 million** for U105 study expenses in four installments, with the first **$500 thousand** paid in April 2022[84](index=84&type=chunk) - The Drexel License Agreement for RAD52 inhibitors includes a **$20 thousand initiation fee**, potential milestone payments up to **$6.25 million**, and low single-digit royalties on net sales[91](index=91&type=chunk) - Payments under the Drexel License Agreement were **$5 thousand for Q1 2022**, compared to **$19 thousand for Q1 2021**[93](index=93&type=chunk) - A clinical supply agreement with Roche was entered in December 2021 for atezolizumab supply in planned combination trials with milademetan, with **no financial commitments**[96](index=96&type=chunk) [Note 8 – Commitments and Contingencies](index=20&type=section&id=Note%208%20%E2%80%93%20Commitments%20and%20Contingencies) This note outlines the company's lease obligations for its corporate headquarters and general contingencies - The company has a noncancelable operating lease for its Newark, California corporate headquarters, with a term ending **September 2024**[97](index=97&type=chunk)[98](index=98&type=chunk) | Year | Amount (in thousands) | | :-------------------------- | :-------------------- | | 2022 - remainder | $125 | | 2023 | $171 | | 2024 | $129 | | **Total minimum lease payments** | **$425** | | Less: amount representing interest | $(45) | | **Present value of operating lease liabilities** | **$380** | - Total operating lease expense was **$40 thousand for Q1 2022**, compared to **$34 thousand for Q1 2021**[100](index=100&type=chunk) [Note 9 – Employee Benefits](index=21&type=section&id=Note%209%20%E2%80%93%20Employee%20Benefits) The company offers a defined contribution 401(k) plan to eligible employees and made matching contributions - The company made matching contributions of **$75 thousand to its 401(k) plan for Q1 2022**, compared to **$78 thousand for Q1 2021**[102](index=102&type=chunk) [Note 10 – Net Loss Per Share](index=21&type=section&id=Note%2010%20%E2%80%93%20Net%20Loss%20Per%20Share) This note details the computation of basic and diluted net loss per share, highlighting that potentially dilutive securities are excluded due to the company's net loss position | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss | $(17,394) | $(6,800) | | Weighted-average shares outstanding | 26,511,743 | 3,530,975 | | **Net loss per share, basic and diluted** | **$(0.66)** | **$(1.93)** | - Potentially dilutive securities (stock options, ESPP shares, convertible preferred stock) are excluded from diluted EPS calculation as their inclusion would be anti-dilutive due to net loss[44](index=44&type=chunk)[103](index=103&type=chunk) [Note 11 – Subsequent Events](index=21&type=section&id=Note%2011%20%E2%80%93%20Subsequent%20Events) The company evaluated subsequent events after March 31, 2022, and determined that no additional material events arose that require disclosure - No material events requiring disclosure were identified after March 31, 2022[104](index=104&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's discussion and analysis of financial condition and results of operations, covering business, pipeline, performance, liquidity, and accounting policies [Overview](index=22&type=section&id=Overview) This overview introduces Rain Therapeutics Inc. as a late-stage precision oncology company, detailing its lead product candidate, clinical trials, and financial position - Rain Therapeutics Inc. is a late-stage precision oncology company developing therapies targeting oncogenic drivers via a tumor-agnostic strategy[106](index=106&type=chunk) - The lead product candidate, **milademetan (RAIN-32)**, is an oral MDM2 inhibitor, showing antitumor activity in MDM2-amplified liposarcoma (LPS) and other solid tumors[107](index=107&type=chunk) - Clinical trials include the pivotal **Phase 3 MANTRA trial in LPS (July 2021)**, **Phase 2 MANTRA-2 basket trial (November 2021)**, and anticipated **Phase 2 MANTRA-3** and **Phase 1/2 MANTRA-4 combination trials in Q4 2022**[107](index=107&type=chunk) - The company had an accumulated deficit of **$107.4 million** as of March 31, 2022, with net losses of **$17.4 million (Q1 2022)** and **$6.8 million (Q1 2021)**[108](index=108&type=chunk) - Net proceeds from the April/May 2021 IPO were **$121.5 million**, contributing to **$123.2 million in cash, cash equivalents, and short-term investments** as of March 31, 2022[108](index=108&type=chunk) - The company expects continued significant expenses and operating losses, necessitating additional capital for future R&D and potential commercialization[108](index=108&type=chunk)[110](index=110&type=chunk) [COVID-19](index=23&type=section&id=COVID-19) This section discusses the COVID-19 pandemic's impact on the company's operations, clinical development, and potential regulatory delays - The **COVID-19 pandemic has not materially impacted expenditures** to date, but its ultimate effects on operations, clinical development, and capital raising remain uncertain[112](index=112&type=chunk) - Most employees are working remotely, with **no negative impact on productivity** or the integrity of subject data and clinical trial endpoints[112](index=112&type=chunk) - There is a potential risk of regulatory delays if the FDA or other authorities are prevented from conducting routine inspections or reviews[112](index=112&type=chunk) [Recent Developments](index=23&type=section&id=Recent%20Developments) This section highlights recent corporate developments, including a clinical supply agreement with Roche for combination trials - In January 2022, the company announced a clinical supply agreement with Roche for **atezolizumab supply** to evaluate its combination with milademetan in planned clinical trials (MANTRA-4)[113](index=113&type=chunk)[122](index=122&type=chunk) - Rain Therapeutics Inc. will be the sponsor of these anticipated clinical trials, with Roche supplying atezolizumab[113](index=113&type=chunk)[122](index=122&type=chunk) [Our Development Pipeline](index=23&type=section&id=Our%20Development%20Pipeline) This section outlines the company's development pipeline, focusing on its strategy to target oncogenic drivers with differentiated therapies - The company's development pipeline targets oncogenic drivers through differentiated therapies, genetically selecting patients most likely to benefit[114](index=114&type=chunk) - The company currently retains global development and commercialization rights to all its product candidates[114](index=114&type=chunk) [Milademetan Overview](index=24&type=section&id=Milademetan%20Overview) Milademetan, an MDM2 inhibitor, is in pivotal Phase 3 (LPS) and Phase 2 (tumor-agnostic) trials, with further trials planned for Merkel cell carcinoma and combination therapy - **Milademetan** is a small molecule, oral MDM2 inhibitor, developed with an optimized dosing schedule to reduce toxicities while preserving activity[115](index=115&type=chunk) - Phase 1 data showed meaningful antitumor activity in MDM2-amplified liposarcoma (LPS), with a **median progression-free survival (mPFS) of approximately seven to eight months** in WD/DD LPS patients[107](index=107&type=chunk)[116](index=116&type=chunk) - The pivotal **Phase 3 MANTRA trial for de-differentiated LPS** commenced in **July 2021**, with top-line data anticipated in the **first half of 2023**[116](index=116&type=chunk)[117](index=117&type=chunk) - A **Phase 2 tumor-agnostic basket trial (MANTRA-2)** for MDM2-amplified advanced solid tumors commenced in **November 2021**, with an interim analysis anticipated in **Q4 2022**[120](index=120&type=chunk) - A **Phase 2 clinical trial in Merkel cell carcinoma (MANTRA-3)** is on track to commence in **Q4 2022**, and a **Phase 1/2 clinical trial (MANTRA-4)** evaluating milademetan with atezolizumab is also anticipated to start in **Q4 2022**[107](index=107&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk) - Long-term Phase 1 data showed three WD/DD LPS patients received milademetan monotherapy for over **51 months**, with two showing **no disease progression for 51 and 57 months**, suggesting favorable long-term tolerability[118](index=118&type=chunk)[119](index=119&type=chunk) [RAD52 and p53 Overview](index=25&type=section&id=RAD52%20and%20p53%20Overview) The company is developing a preclinical RAD52 program for HRD+ and PARP inhibitor-relapsed tumors, while milademetan reactivates p53 by inhibiting MDM2 in cancers with wild-type p53 - The preclinical program focuses on targeting **RAD52** in the DNA damage repair pathway to induce synthetic lethality in cancer cells[107](index=107&type=chunk)[123](index=123&type=chunk) - The **RAD52 program** aims to treat **HRD+ patients (e.g., BRCA1/2 mutations)** and those relapsed to PARP inhibitor therapy, representing a novel strategy with no currently approved therapies[123](index=123&type=chunk)[124](index=124&type=chunk) - **Milademetan reactivates p53** by inhibiting MDM2, preventing MDM2-p53 complex formation and triggering cancer cell cycle arrest or apoptosis[126](index=126&type=chunk)[128](index=128&type=chunk) - **MDM2 dependence** has been identified in several solid tumors where MDM2 overexpression functionally suppresses wild-type p53[127](index=127&type=chunk) [Collaboration and License Agreements](index=26&type=section&id=Collaboration%20and%20License%20Agreements) This section refers to Note 7 for details on the company's various in-license agreements for product candidates and development programs - The company is party to several license agreements for in-licensing product candidates and development programs, with details in Note 7 to the Condensed Financial Statements[129](index=129&type=chunk) [Components of Our Results of Operations](index=26&type=section&id=Components%20of%20Our%20Results%20of%20Operations) This section outlines the components of the company's results of operations, including revenue, operating expenses, and interest income - The company has not generated any revenue from product sales, licenses, or collaborations to date and does not expect to in the foreseeable future[130](index=130&type=chunk) - Operating expenses since inception have consisted solely of **research and development costs** (including in-process R&D acquisition) and **general and administrative costs**[131](index=131&type=chunk) [Revenue](index=26&type=section&id=Revenue) The company has not generated revenue from product sales, licenses, or collaborations to date, with future revenue contingent on successful product development and regulatory approval - **No revenue** has been generated from product sales, licenses, or collaborations to date[130](index=130&type=chunk) - Future revenue is uncertain and dependent on successful development, regulatory approval, and potential commercialization or licensing agreements[130](index=130&type=chunk) [Operating Expenses](index=26&type=section&id=Operating%20Expenses) Operating expenses are categorized into research and development (R&D) and general and administrative (G&A) costs, which are recognized as incurred - Operating expenses consist of **research and development costs** and **general and administrative costs**[131](index=131&type=chunk) - Expenses are recognized as incurred[132](index=132&type=chunk) [Research and Development Expenses](index=26&type=section&id=Research%20and%20Development%20Expenses) R&D expenses, recognized as incurred, cover drug discovery, preclinical/clinical development, and are expected to increase significantly as product candidates advance - R&D expenses include salaries, benefits, stock-based compensation for R&D personnel, preclinical/clinical study costs (CROs, consultants), drug manufacturing, regulatory compliance, and license/milestone payments[134](index=134&type=chunk) - External development costs are tracked by product candidate, while internal personnel and other costs remain unallocated[133](index=133&type=chunk) | Item | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Milademetan | $8,551 | $2,404 | | Other research and clinical candidates | $250 | $1,078 | | Unallocated internal R&D costs | $4,754 | $1,846 | | **Total research and development expenses** | **$13,555** | **$5,328** | - R&D expenses are expected to increase substantially as product candidates continue to develop[135](index=135&type=chunk) [General and Administrative Expenses](index=27&type=section&id=General%20and%20Administrative%20Expenses) G&A expenses include salaries, stock-based compensation, legal, accounting, consulting, and facility costs, expected to increase with R&D support, pre-commercial, and public company operations - G&A expenses consist of salaries, employee-related costs (including stock-based compensation) for administrative functions, legal, professional, and facility-related fees[137](index=137&type=chunk) - G&A expenses are expected to increase to support continued R&D, pre-commercial preparation, and public company operations (audit, legal, regulatory, D&O insurance, investor relations)[137](index=137&type=chunk) [Interest Income](index=27&type=section&id=Interest%20Income) Interest income for the three months ended March 31, 2022, was derived from money market accounts and short-term investments - Interest income is generated from money market accounts and short-term investments[138](index=138&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) This section provides a detailed comparison of the company's financial performance for the three months ended March 31, 2022, versus 2021 [Comparison of Three Months Ended March 31, 2022](index=28&type=section&id=Comparison%20of%20Three%20Months%20Ended%20March%2031%2C%202022) Total operating expenses increased by **$10.6 million**, resulting in a **$17.4 million net loss for Q1 2022**, compared to **$6.8 million in Q1 2021** | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | Change (in thousands) | | :-------------------------- | :-------------------------------- | :-------------------------------- | :------- | | Research and development | $13,555 | $5,328 | $8,227 | | General and administrative | $3,895 | $1,480 | $2,415 | | Total operating expenses | $17,450 | $6,808 | $10,642 | | Loss from operations | $(17,450) | $(6,808) | $(10,642) | | Interest income | $56 | $8 | $48 | | **Net loss** | **$(17,394)** | **$(6,800)** | **$(10,594)** | [Research and Development Expenses](index=28&type=section&id=Research%20and%20Development%20Expenses_2) R&D expenses increased by **$8.2 million to $13.6 million in Q1 2022**, driven by milademetan and other research, including higher non-cash stock compensation, and are expected to continue rising - R&D expenses increased by **$8.2 million**, from **$5.3 million in Q1 2021** to **$13.6 million in Q1 2022**[140](index=140&type=chunk) - The increase was primarily related to **milademetan** and other research costs[140](index=140&type=chunk) - Non-cash stock-based compensation expenses within R&D increased from **$0.1 million in Q1 2021** to **$0.9 million in Q1 2022**[140](index=140&type=chunk) - R&D costs are expected to continue increasing in 2022 with ongoing **Phase 3 and Phase 2 trials for milademetan**[140](index=140&type=chunk) [General and Administrative Expenses](index=28&type=section&id=General%20and%20Administrative%20Expenses_2) G&A expenses increased by **$2.4 million to $3.9 million in Q1 2022**, driven by higher D&O insurance, payroll, third-party G&A costs, and increased stock-based compensation - G&A expenses increased by **$2.4 million**, from **$1.5 million in Q1 2021** to **$3.9 million in Q1 2022**[141](index=141&type=chunk) - The increase was primarily due to **director and officer insurance ($0.8 million)**, **payroll-related costs ($1.1 million)**, and various **third-party G&A costs ($2.0 million)**[141](index=141&type=chunk) - Non-cash stock-based compensation in G&A increased from **$31 thousand in Q1 2021** to approximately **$0.4 million in Q1 2022**[141](index=141&type=chunk) - G&A expenses are expected to continue increasing in 2022 due to public company operations and personnel expansion[141](index=141&type=chunk) [Other (Income) Expense](index=28&type=section&id=Other%20(Income)%20Expense) Other income for both periods primarily consisted of interest income from money market and short-term investments - Other income for both Q1 2022 and Q1 2021 primarily represents interest income from money market or short-term investments[142](index=142&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's liquidity, capital resources, future funding requirements, and cash flow activities - The company has incurred significant operating losses since inception and expects continued substantial expenses and losses for the foreseeable future[143](index=143&type=chunk) - Operations have been financed through convertible promissory notes, preferred stock, and **$121.5 million net proceeds from the April 2021 IPO**[144](index=144&type=chunk)[145](index=145&type=chunk) - As of March 31, 2022, cash, cash equivalents, and short-term investments totaled **$123.2 million**, believed sufficient for at least the next **twelve months**[145](index=145&type=chunk) - Additional capital will be required for future R&D activities and public company operations, potentially through equity/debt financings or collaborations[143](index=143&type=chunk)[149](index=149&type=chunk) [Future Funding Requirements](index=29&type=section&id=Future%20Funding%20Requirements) The company anticipates substantial expense increases for milademetan clinical trials, RAD52 preclinical research, and public company operations, with uncertain timing due to drug development unpredictability - Expenses are expected to increase substantially due to ongoing and new clinical trials for **milademetan**, preclinical research for **RAD52**, and other product candidates[146](index=146&type=chunk) - Additional costs are anticipated from operating as a public company[146](index=146&type=chunk) - The timing and amounts of increased capital outlays and operating expenses are uncertain due to the unpredictable nature of clinical and preclinical development[146](index=146&type=chunk) - Future capital requirements depend on factors such as clinical trial scope and costs, regulatory review, commercialization, intellectual property, acquisitions, and headcount growth[147](index=147&type=chunk) - Raising additional capital through equity or convertible debt may dilute the ownership interest of existing stockholders[149](index=149&type=chunk) [Cash Flows](index=30&type=section&id=Cash%20Flows) The company experienced a net decrease in cash and cash equivalents of **$3.3 million in Q1 2022**, driven by operating losses, partially offset by investing activities | Activity Type | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(17,110) | $(4,866) | | Net cash provided by (used in) investing activities | $13,436 | $(29) | | Net cash provided by (used in) financing activities | $399 | $(858) | | **Net decrease in cash and cash equivalents** | **$(3,275)** | **$(5,753)** | [Operating Activities](index=31&type=section&id=Operating%20Activities) Net cash used in operating activities significantly increased to **$17.1 million in Q1 2022**, driven by a **$17.4 million net loss** and decreased operating assets/liabilities, partially offset by non-cash stock compensation - Net cash used in operating activities was **$17.1 million in Q1 2022**, primarily due to a **$17.4 million net loss** and a **$1.0 million decrease in operating assets and liabilities**[151](index=151&type=chunk) - This was partially offset by a non-cash stock compensation adjustment of **$1.2 million**[151](index=151&type=chunk) - In Q1 2021, net cash used in operating activities was **$4.9 million**, driven by a **$6.8 million net loss**, partially offset by changes in operating assets/liabilities (**$1.8 million**) and non-cash adjustments (**$0.2 million**)[152](index=152&type=chunk) [Investing Activities](index=31&type=section&id=Investing%20Activities) Net cash provided by investing activities was **$13.4 million in Q1 2022**, mainly from short-term investment maturities offsetting purchases; Q1 2021 saw cash used for property and equipment - Net cash provided by investing activities was **$13.4 million in Q1 2022**, primarily from **$23.0 million in short-term investment maturities**, partially offset by **$9.5 million in purchases**[153](index=153&type=chunk) - Net cash used in investing activities for Q1 2021 was **$29 thousand** for property and equipment purchases[153](index=153&type=chunk) [Financing Activities](index=31&type=section&id=Financing%20Activities) Net cash provided by financing activities was **$0.4 million in Q1 2022**, mainly from stock option exercises and ESPP purchases; Q1 2021 saw cash used for IPO offering costs - Net cash provided by financing activities was **$0.4 million in Q1 2022**, primarily from proceeds from option exercises and ESPP purchases[154](index=154&type=chunk) - Net cash used in financing activities for Q1 2021 was **$0.9 million**, primarily related to payments for deferred IPO offering costs[154](index=154&type=chunk) [Obligations and other Commitments](index=31&type=section&id=Obligations%20and%20other%20Commitments) The company has cancelable license agreements with unestimable future milestone/royalty payments, and cancelable CRO/vendor contracts, with accrued R&D obligations of **$5.4 million** as of March 31, 2022 - License agreements may require future milestone and royalty payments, which are not estimable and are cancelable by the company[155](index=155&type=chunk) - Contracts with CROs and other vendors are generally cancelable and do not contain minimum purchase commitments[156](index=156&type=chunk) - Accrued research and development obligations were **$5.4 million as of March 31, 2022**, compared to **$4.3 million as of December 31, 2021**[156](index=156&type=chunk) - No material changes to contractual obligations occurred during Q1 2022 outside the ordinary course of business[157](index=157&type=chunk) [Critical Accounting Policies and Use of Estimates](index=31&type=section&id=Critical%20Accounting%20Policies%20and%20Use%20of%20Estimates) This section reviews the company's critical accounting policies and the use of estimates, including accrued liabilities and stock-based compensation - No significant changes to critical accounting policies and estimates from the 2021 Form 10-K, except as described in Note 2[158](index=158&type=chunk) [Accrued Liabilities](index=31&type=section&id=Accrued%20Liabilities) The company estimates and accrues expenses for vendor, consultant, CRO, and clinical site contracts based on service progress, with accrued R&D at **$5.4 million** as of March 31, 2022 - The company estimates expenses for obligations under contracts with vendors, consultants, CROs, and clinical sites, matching expenses with the period services are provided[159](index=159&type=chunk)[161](index=161&type=chunk) - Accrued research and development balances were **$5.4 million as of March 31, 2022**, compared to **$4.3 million as of December 31, 2021**[161](index=161&type=chunk) - Other accrued liabilities balances were **$4.5 million as of March 31, 2022**, compared to **$5.7 million as of December 31, 2021**[161](index=161&type=chunk) - To date, no material differences have been experienced between accrued costs and actual costs incurred[161](index=161&type=chunk) [Stock-Based Compensation](index=32&type=section&id=Stock-Based%20Compensation_2) Stock-based compensation expense is measured using the Black-Scholes model, requiring volatility and expected term estimates; total expense was **$1.2 million in Q1 2022**, with **$14.2 million in unrecognized costs** - Stock-based compensation expense is measured and recognized over the requisite service period using the Black-Scholes option pricing model[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk) - The model requires estimates for assumptions such as expected stock price volatility and the estimated expected term of each award[163](index=163&type=chunk) - Stock-based compensation expense was **$1.2 million for Q1 2022**, compared to **$0.2 million for Q1 2021**[164](index=164&type=chunk) | Item | As of March 31, 2022 | As of December 31, 2021 | | :-------------------------------- | :------------------- | :---------------------- | | Unvested equity compensation costs not yet recognized (in millions) | $14.2 | $9.8 | | Weighted average period over which the unvested awards are expected to be recognized (in years) | 3.2 | 3.1 | [Recent Accounting Pronouncements](index=32&type=section&id=Recent%20Accounting%20Pronouncements_2) Refers to Note 2 for disclosures on recent accounting pronouncements and their potential impact - A description of recent accounting pronouncements potentially impacting the company's financial position, results of operations, or cash flows is disclosed in Note 2[166](index=166&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Rain Therapeutics Inc. is not required to provide quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[167](index=167&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of March 31, 2022, with no material changes in internal control over financial reporting identified - Management concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2022[169](index=169&type=chunk) - Management recognizes that controls and procedures provide only reasonable assurance and involve judgment in evaluating cost-benefit relationships[168](index=168&type=chunk)[170](index=170&type=chunk) - No changes in internal control over financial reporting were identified during Q1 2022 that materially affected or are reasonably likely to materially affect internal control[170](index=170&type=chunk) [PART II. OTHER INFORMATION](index=34&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part contains other required information, including legal proceedings, risk factors, equity sales, defaults, and exhibits [Item 1. Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings - There are no legal proceedings to report[173](index=173&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2021 - No material changes from the risk factors disclosed in Part I, Item 1A of the Annual Report on Form 10-K for the year ended December 31, 2021[174](index=174&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds - There were no unregistered sales of equity securities and no use of proceeds to report[175](index=175&type=chunk) [Item 3. Defaults Upon Senior Securities](index=34&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - There were no defaults upon senior securities to report[176](index=176&type=chunk) [Item 4. Mine Safety Disclosures](index=34&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reported no mine safety disclosures - There were no mine safety disclosures to report[177](index=177&type=chunk) [Item 5. Other Information](index=34&type=section&id=Item%205.%20Other%20Information) The company reported no other information - There is no other information to report[178](index=178&type=chunk) [Item 6. Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed or furnished as part of the Quarterly Report on Form 10-Q, including corporate documents, certifications, and XBRL data files - Exhibits include the Amended and Restated Certificate of Incorporation, Bylaws, Common Stock Certificate Form, Amended and Restated Investors' Rights Agreement, various certifications (**31.1, 31.2, 32.1**), and Inline XBRL documents[180](index=180&type=chunk) [Signatures](index=36&type=section&id=Signatures) The report is duly signed on behalf of Rain Therapeutics Inc. by its Chairman and Chief Executive Officer and its Senior Vice President of Finance and Administration - The report is signed by **Avanish Vellanki (Chairman and Chief Executive Officer)** and **Nelson Cabatuan (Senior Vice President of Finance and Administration)**[183](index=183&type=chunk)

Clinical Trials and Product Development - The lead product candidate, milademetan, demonstrated a median progression-free survival (mPFS) of approximately 7 to 8 months in patients with MDM2-amplified liposarcoma during Phase 1 clinical trials[14]. - Milademetan is currently undergoing a Phase 3 clinical trial for liposarcoma (MANTRA) and a Phase 2 tumor-agnostic basket trial (MANTRA-2) for certain solid tumors[14]. - The company plans to initiate a Phase 2 clinical trial (MANTRA-3) for Merkel cell carcinoma in the second half of 2022 and a Phase 1 trial (MANTRA-4) to evaluate milademetan in combination with atezolizumab[14]. - Milademetan demonstrated meaningful antitumor activity in a Phase 1 trial with a disease control rate (DCR) of 58.5% in WD/DD LPS patients, compared to 32.4% in a non-LPS population[29]. - In the Phase 1 trial, 3.8% of WD/DD LPS patients achieved partial response, while 64.2% achieved stable disease[28]. - The pivotal Phase 3 trial (MANTRA) for WD/DD LPS patients initiated in July 2021 aims to compare progression-free survival (PFS) between milademetan and trabectedin, with an expected enrollment of approximately 160 patients[34]. - A Phase 2 tumor-agnostic basket trial (MANTRA-2) was initiated in November 2021, targeting approximately 65 patients with MDM2-amplified tumors[36]. - The company plans to commence a Phase 2 trial (MANTRA-3) for Merkel Cell Carcinoma (MCC) patients refractory to immune checkpoint inhibitors, with an expected enrollment of 34 patients[39]. Strategic Focus and Pipeline - The strategy includes utilizing biomarker-driven patient selection to increase the probability of clinically meaningful benefits for pipeline programs[15]. - The company aims to maximize commercial success by focusing on tumor-agnostic clinical trials, leveraging existing comprehensive next-generation sequencing (NGS) diagnostics[15]. - The development pipeline targets oncogenic drivers through differentiated therapies, retaining global development and commercialization rights to all product candidates[22]. - The company seeks to build a pipeline of precision oncology therapeutics for genetically-defined patients by discovering or licensing programs targeting novel oncogenic drivers[19]. - The approach includes pursuing collaborations with leading academic clinical investigators to evaluate new therapeutic indications and combinations[19]. - The company emphasizes the importance of understanding molecular machinery in tumors to develop effective cancer therapeutics[18]. Financial Obligations and Agreements - The company has paid an initial upfront payment of $5.0 million to Daiichi Sankyo and is obligated to make future milestone payments of up to $222.5 million[51]. - The royalty obligation to Daiichi Sankyo is a high single-digit percentage based on annual net sales of milademetan products, with no payments made to date[53]. - The company is required to pay Drexel a low single-digit royalty on net sales of licensed products, with a minimum quarterly royalty payment of $6,250[58]. - The Drexel License Agreement includes a one-time initiation fee of $20,000 and milestone payments up to $6.25 million for achieving specified development and regulatory milestones[58]. - The Daiichi Sankyo License Agreement remains effective until all development and commercial activities related to the Licensed Compound cease, with termination rights for both parties under specific conditions[54]. Regulatory and Compliance - The company must conduct preclinical studies and submit an Investigational New Drug (IND) application to the FDA before initiating human clinical trials[82]. - The FDA may impose a clinical hold on trials, delaying or suspending investigations based on safety concerns[84]. - The FDA conducts preliminary reviews of NDAs within 60 days and may request additional information before accepting an application for substantive review[95]. - The FDA typically inspects manufacturing facilities and clinical sites for compliance with current good manufacturing practices (cGMP) before approving an NDA[97]. - The FDA may issue an approval letter or a complete response letter based on the evaluation of the NDA, with the latter indicating deficiencies that need to be addressed before reconsideration[99]. - The company must maintain compliance with extensive regulations governing manufacturing processes and quality control[65]. - The company is subject to extensive government regulations regarding drug development, testing, and marketing, requiring significant time and financial resources[80]. Intellectual Property - The patent portfolio for milademetan includes fourteen issued U.S. patents and ninety-seven issued foreign patents, all exclusively licensed from Daiichi Sankyo, with expiration expected in March 2032 for certain patents[71]. - The RAD52 program has two patent families directed to RAD52 inhibitors, with one family comprising two issued U.S. patents expected to expire in June 2036[74]. - The company intends to apply for patent term extensions for its drug candidates upon receiving FDA approval, which may extend the patent term by up to five years, but not beyond a total of 14 years from the date of product approval[78]. Market and Competitive Landscape - The company focuses on developing precision small molecule therapies for cancers with high unmet medical needs, competing against numerous other companies in this space[180]. - The lead product candidate, milademetan, targets MDM2, with no approved drugs currently available for this target, although several companies are testing MDM2 inhibitors[181]. - The RAD52 program is currently the most advanced program targeting RAD52, with no other approved or clinical-stage therapeutics available[182]. - The company faces competition from larger firms with greater financial resources and expertise in research and development, which may impact its market opportunities[183]. Workforce and Company Culture - The company had 44 full-time employees as of December 31, 2021, with 31 in research and development and 13 in general and administrative roles[185]. - 48% of the company's employees are women, and they speak over 21 languages, reflecting a diverse workforce[188]. - The company is committed to providing a safe and healthy work environment, especially during the COVID-19 pandemic, with most employees working remotely[192]. - The company emphasizes the importance of recruiting and retaining qualified scientific personnel to ensure business success[185]. Financial Reporting and Compliance - The company is classified as an emerging growth company, allowing it to take advantage of certain reporting exemptions until it meets specific revenue or market value thresholds[197]. - The company has elected to take advantage of the JOBS Act exemption, allowing it to delay the adoption of certain accounting standards until they apply to private companies, which may complicate financial comparisons with other public companies[198]. - The company qualifies as a smaller reporting company, with non-affiliate common stock held being less than $250 million or annual revenue below $100 million, allowing it to utilize scaled disclosures[199]. - The company is not required to provide quantitative and qualitative disclosures about market risk due to its status as a smaller reporting company[390].

```markdown PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed financial statements for Rain Therapeutics Inc., including the balance sheets, statements of operations and comprehensive loss, statements of changes in convertible preferred stock and stockholders' equity (deficit), and statements of cash flows, along with their accompanying notes [Condensed Balance Sheets as of September 30, 2021 (Unaudited) and December 31, 2020](index=3&type=section&id=Condensed%20Balance%20Sheets%20as%20of%20September%2030%2C%202021%20(Unaudited)%20and%20December%2031%2C%202020) The balance sheet shows a significant increase in total assets and stockholders' equity as of September 30, 2021, primarily driven by the IPO proceeds and short-term investments, while convertible preferred stock was eliminated Balance Sheet Data (in thousands) | Metric (in thousands) | Sep 30, 2021 | Dec 31, 2020 | Change | | :-------------------- | :----------- | :----------- | :----- | | Cash and cash equivalents | $13,258 | $58,863 | $(45,605) | | Short-term investments | $136,823 | $— | $136,823 | | Total current assets | $157,406 | $59,525 | $97,881 | | Total assets | $158,531 | $61,080 | $97,451 | | Total current liabilities | $10,904 | $3,419 | $7,485 | | Total liabilities | $11,256 | $3,800 | $7,456 | | Total convertible preferred stock | $— | $94,697 | $(94,697) | | Total stockholders' equity (deficit) | $147,275 | $(37,417) | $184,692 | [Condensed Statements of Operations and Comprehensive Loss (Unaudited) for the three and nine months ended September 30, 2021 and 2020](index=4&type=section&id=Condensed%20Statements%20of%20Operations%20and%20Comprehensive%20Loss%20(Unaudited)%20for%20the%20three%20and%20nine%20months%20ended%20September%2030%2C%202021%20and%202020) The company experienced increased operating expenses, particularly in R&D and G&A, leading to a higher net loss for both the three and nine months ended September 30, 2021, compared to the prior year Statements of Operations Data (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Research and development | $15,284 | $7,893 | $26,101 | $11,195 | | General and administrative | $3,154 | $591 | $7,334 | $2,311 | | Total operating expenses | $18,438 | $8,484 | $33,435 | $13,506 | | Net loss | $(18,426) | $(10,446) | $(33,409) | $(15,640) | | Net loss per share, basic and diluted | $(0.70) | $(3.05) | $(1.96) | $(4.73) | [Condensed Statements of Changes in Convertible Preferred Stock and Stockholders' Equity (Deficit) (Unaudited) for the three and nine months ended September 30, 2021 and 2020](index=5&type=section&id=Condensed%20Statements%20of%20Changes%20in%20Convertible%20Preferred%20Stock%20and%20Stockholders'%20Equity%20(Deficit)%20(Unaudited)%20for%20the%20three%20and%20nine%20months%20ended%20September%2030%2C%202021%20and%202020) The statements reflect significant changes in equity structure, primarily due to the conversion of all convertible preferred stock into common stock and non-voting common stock, and the issuance of common stock from the IPO, leading to a substantial increase in additional paid-in capital and total stockholders' equity Equity Changes Data (in thousands) | Metric (in thousands) | Dec 31, 2020 | Sep 30, 2021 | | :-------------------- | :----------- | :----------- | | Total convertible preferred stock | $94,697 | $— | | Common Stock (Amount) | $4 | $27 | | Additional paid-in capital | $1,149 | $219,222 | | Accumulated deficit | $(38,570) | $(71,979) | | Total stockholders' equity (deficit) | $(37,417) | $147,275 | - Conversion of convertible preferred stock to common stock resulted in a **$94.7 million** increase in additional paid-in capital[12](index=12&type=chunk) - Issuance of common stock upon IPO, net of issuance cost, contributed **$121.5 million** to additional paid-in capital[12](index=12&type=chunk) [Condensed Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2021 and 2020](index=7&type=section&id=Condensed%20Statements%20of%20Cash%20Flows%20(Unaudited)%20for%20the%20nine%20months%20ended%20September%2030%2C%202021%20and%202020) Cash flow from operating activities remained negative, while investing activities saw a significant increase in cash used due to short-term investments. Financing activities provided substantial cash, primarily from the IPO, offsetting the cash used in operating and investing activities Cash Flow Data (in thousands) | Metric (in thousands) | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------------- | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $(27,704) | $(6,775) | | Net cash used in investing activities | $(139,480) | $(5,156) | | Net cash provided by financing activities | $121,579 | $69,518 | | Net (decrease) increase in cash and cash equivalents | $(45,605) | $57,587 | | Cash and cash equivalents at end of period | $13,258 | $63,381 | - Proceeds from initial public offering, net of issuance costs, provided **$121.494 million** in financing activities for the nine months ended September 30, 2021[15](index=15&type=chunk) - Purchases of short-term investments accounted for **$136.852 million** in cash used in investing activities for the nine months ended September 30, 2021[15](index=15&type=chunk) [Notes to Unaudited Condensed Financial Statements (Unaudited)](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Financial%20Statements%20(Unaudited)) These notes provide detailed information on the company's organization, significant accounting policies, fair value measurements, related party transactions, convertible promissory notes, changes in equity, license agreements, commitments, net loss per share calculations, and subsequent events [Note 1 – Organization and Nature of Operations](index=8&type=section&id=Note%201%20%E2%80%93%20Organization%20and%20Nature%20of%20Operations) Rain Therapeutics Inc. is a late-stage precision oncology company focused on developing therapies targeting oncogenic drivers, with its lead product candidate, milademetan, and a preclinical RAD52 program. The company completed its IPO in April 2021, raising $121.5 million net proceeds, and converted all preferred stock to common stock - Rain Therapeutics Inc. is a late-stage precision oncology company developing therapies for oncogenic drivers, using a tumor-agnostic strategy[17](index=17&type=chunk) - Lead product candidate, milademetan, is an oral inhibitor of MDM2[17](index=17&type=chunk) - Completed IPO on April 27, 2021, issuing 7,352,941 shares of common stock at $17.00/share, with net proceeds of **$121.5 million**[19](index=19&type=chunk) - All convertible preferred stock was converted into common stock or non-voting common stock immediately prior to and upon the closing of the IPO[20](index=20&type=chunk) [Note 2 – Summary of Significant Accounting Policies](index=9&type=section&id=Note%202%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the company's key accounting policies, including the use of estimates, classification of cash and cash equivalents, available-for-sale investments, deferred offering costs, research and development costs, preclinical and clinical trial accruals, stock-based compensation, comprehensive loss, and net loss per share. It also discusses recent accounting pronouncements - Research and development costs are expensed as incurred[32](index=32&type=chunk) - Stock-based compensation expense is recognized over the vesting period using the Black-Scholes option pricing model[34](index=34&type=chunk) - The company elected early adoption of ASU 2020-06 (Debt and Equity Instruments) on January 1, 2020, with no material impact[40](index=40&type=chunk) [Note 3 – Fair Value Measurements](index=11&type=section&id=Note%203%20%E2%80%93%20Fair%20Value%20Measurements) The company classifies its financial assets measured at fair value into a three-tier hierarchy (Level 1, 2, 3) based on the observability of inputs. As of September 30, 2021, most investments were classified as Level 2, with money market funds as Level 1, and no Level 3 liabilities Fair Value of Financial Assets (in thousands) | Financial Assets (in thousands) | Level 1 (Sep 30, 2021) | Level 2 (Sep 30, 2021) | Total (Sep 30, 2021) | | :------------------------------ | :--------------------- | :--------------------- | :------------------- | | Money market funds | $6,340 | $— | $6,340 | | Commercial paper | $— | $102,290 | $102,290 | | U.S. government securities | $— | $24,365 | $24,365 | | U.S. agency bonds | $— | $8,047 | $8,047 | | Corporate debt securities | $— | $7,280 | $7,280 | | Total investments | $6,340 | $141,982 | $148,322 | - Cash and cash equivalents are classified using Level 1 inputs[45](index=45&type=chunk) - Commercial paper, corporate debt securities, U.S. government securities, and U.S. agency bonds are valued using Level 2 inputs[50](index=50&type=chunk) - Contractual maturities of AFS securities as of September 30, 2021: **$113.9 million** due within one year, **$22.9 million** due within one to two years[52](index=52&type=chunk) [Note 4 – Related Party Transactions](index=13&type=section&id=Note%204%20%E2%80%93%20Related%20Party%20Transactions) This note details the issuance and subsequent conversion of convertible promissory notes to certain preferred stock holders in 2019 and 2020, which were treated as related party transactions - The company issued 2019 Notes (**$2.5 million**) and 2020 Notes (**$6.4 million**) to certain holders of convertible preferred stock[55](index=55&type=chunk) - In September 2020, all outstanding convertible promissory notes (fair value **$11.2 million** plus **$167,000** accrued interest) were converted to 1,905,688 shares of Series B convertible preferred stock[55](index=55&type=chunk) - Change in fair value of convertible promissory notes for the three and nine months ended September 30, 2020, was **$1.9 million** and **$2.0 million**, respectively[55](index=55&type=chunk) [Note 5 – Convertible Promissory Notes](index=13&type=section&id=Note%205%20%E2%80%93%20Convertible%20Promissory%20Notes) This note provides detailed terms and conversion features of the 2019 and 2020 convertible promissory notes, which bore 5% interest and were convertible into preferred stock upon a qualifying financing or common stock under other conditions. All notes were converted to Series B preferred stock in September 2020 - 2019 Notes (**$2.5 million**) and 2020 Notes (**$6.4 million**) bore an interest rate of **5%** per annum[56](index=56&type=chunk)[58](index=58&type=chunk) - Notes were designed to automatically convert to convertible preferred stock upon a 'Future Qualifying Financing' or 'Qualifying Financing' (net proceeds of at least $10.0 million)[56](index=56&type=chunk)[58](index=58&type=chunk) - In September 2020, all outstanding convertible promissory notes (fair value **$11.2 million** and accrued interest **$167,000**) were converted to 1,905,688 shares of Series B convertible preferred stock[59](index=59&type=chunk) [Note 6 – Convertible Preferred Stock and Stockholders' Equity (Deficit)](index=14&type=section&id=Note%206%20%E2%80%93%20Convertible%20Preferred%20Stock%20and%20Stockholders'%20Equity%20(Deficit)) This note details the company's capital structure changes, including the authorization of common and preferred stock, the reverse stock split, the issuance of Series A and B convertible preferred stock, and their subsequent conversion into common and non-voting common stock prior to the IPO. It also covers the equity incentive plans (2018 Plan, 2021 Plan, ESPP) and stock-based compensation - Prior to IPO, 8,344,905 shares of convertible preferred stock were exchanged for 7,727,470 shares of non-voting common stock, and 7,928,501 shares of convertible preferred stock converted into 7,341,860 shares of common stock[65](index=65&type=chunk) - No convertible preferred stock was outstanding as of September 30, 2021[65](index=65&type=chunk) - The 2021 Equity Incentive Plan (effective April 15, 2021) initially reserved **3,246,120 shares** of common stock, with automatic annual increases[68](index=68&type=chunk) - The 2021 Employee Share Purchase Plan (ESPP) initially reserved **259,689 shares**, with automatic annual increases, allowing employees to purchase stock at **85%** of the lower fair market value[70](index=70&type=chunk) Stock-Based Compensation Expense (in thousands) | Expense Category (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Research and development | $683 | $133 | $1,452 | $379 | | General and administrative | $179 | $68 | $368 | $217 | | Total | $862 | $201 | $1,820 | $596 | - Unrecognized compensation cost related to outstanding options was **$8.8 million** as of September 30, 2021, to be recognized over approximately **3.3 years**[73](index=73&type=chunk) [Note 7 – License Agreements](index=17&type=section&id=Note%207%20%E2%80%93%20License%20Agreements) This note details the company's license agreements, including the Drexel License Agreement for RAD52 inhibitors and the Daiichi Sankyo License Agreement for milademetan. It outlines milestone payments, royalties, and development obligations under these agreements - Drexel License Agreement (July 30, 2020) grants exclusive worldwide license for RAD52 inhibitors for cancer treatment[81](index=81&type=chunk) - Daiichi Sankyo License Agreement (September 2, 2020) grants exclusive worldwide rights to milademetan[87](index=87&type=chunk) - Aggregate future milestone payments of up to **$222.5 million** (excluding a **$2.5 million** milestone) and high single-digit royalties on net sales are required under the Daiichi Sankyo agreement[89](index=89&type=chunk) - A **$5.5 million** milestone fee was recorded as R&D expense in Q3 2021 due to the first patient randomization in the Phase 3 MANTRA trial for milademetan, with **$2.5 million** paid and **$3.0 million** accrued[92](index=92&type=chunk) [Note 8 – Commitments and Contingencies](index=19&type=section&id=Note%208%20%E2%80%93%20Commitments%20and%20Contingencies) This note describes the company's noncancelable operating lease for its corporate headquarters, including an amendment in March 2020 for rent relief and lease extension. It also outlines the future minimum lease payments - The company has a noncancelable operating lease for office space in Newark, CA, ending September 2024[93](index=93&type=chunk)[94](index=94&type=chunk) Future Minimum Lease Payments (in thousands) | Year | Amount (in thousands) | | :--- | :----- | | 2021 - remainder | $40 | | 2022 | $167 | | 2023 | $171 | | 2024 | $129 | | Total minimum lease payments | $507 | [Note 9 – Net Loss Per Share](index=20&type=section&id=Note%209%20%E2%80%93%20Net%20Loss%20Per%20Share) This note provides the computation of basic and diluted net loss per share, highlighting that for the periods presented, there is no difference between basic and diluted shares due to the company's net loss position, making all potentially dilutive securities anti-dilutive Net Loss Per Share Calculation | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net loss (in thousands) | $(18,426) | $(10,446) | $(33,409) | $(15,640) | | Weighted-average shares outstanding | 26,466,746 | 3,422,458 | 17,025,032 | 3,307,932 | | Net loss per share | $(0.70) | $(3.05) | $(1.96) | $(4.73) | - Potentially dilutive securities (stock options, convertible preferred stock, unvested common stock) were excluded from diluted EPS calculation as they were anti-dilutive due to net loss[97](index=97&type=chunk) [Note 10 – Subsequent Events](index=20&type=section&id=Note%2010%20%E2%80%93%20Subsequent%20Events) The company evaluated subsequent events after September 30, 2021, and determined that no additional material events arose that require disclosure - No material subsequent events were identified after September 30, 2021[98](index=98&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an overview of Rain Therapeutics Inc.'s business, recent developments, and detailed analysis of its financial condition and results of operations for the three and nine months ended September 30, 2021. It highlights the company's focus on precision oncology, its lead product candidate milademetan, and its preclinical RAD52 program, along with significant increases in operating expenses and ongoing liquidity needs [Overview](index=21&type=section&id=Overview) Rain Therapeutics is a precision oncology company focused on MDM2 inhibitor milademetan and a preclinical RAD52 program. The company has incurred significant operating losses and an accumulated deficit of $72.0 million, primarily funding operations through its April 2021 IPO ($121.5 million net proceeds) and prior convertible notes/preferred stock. It expects to require additional capital for future R&D and commercialization - Rain is a late-stage precision oncology company developing therapies targeting oncogenic drivers, with a lead candidate milademetan (MDM2 inhibitor) and a preclinical RAD52 program[100](index=100&type=chunk) - Accumulated deficit was **$72.0 million** as of September 30, 2021[101](index=101&type=chunk) - Net losses were approximately **$18.4 million** for the three months and **$33.4 million** for the nine months ended September 30, 2021[101](index=101&type=chunk) - IPO in April 2021 generated **$121.5 million** in net proceeds[101](index=101&type=chunk) - Cash, cash equivalents, and short-term investments totaled **$150.1 million** as of September 30, 2021, believed to be sufficient for at least the next twelve months[101](index=101&type=chunk) [COVID-19](index=22&type=section&id=COVID-19) The company continues to monitor the evolving COVID-19 pandemic, acknowledging its uncertain impact on business, operations, clinical development timelines, and financial needs, while most employees work remotely - The extent of COVID-19's impact on business, operations, and clinical development timelines remains uncertain[105](index=105&type=chunk) - Most employees are working remotely, and the company is conducting business with necessary modifications[105](index=105&type=chunk) [Recent Developments](index=22&type=section&id=Recent%20Developments) Recent developments include plans to commence a Phase 2 clinical trial (MANTRA-3) for milademetan in Merkel cell carcinoma (MCC) in mid-2022, replacing a previously planned trial in intimal sarcoma. The company also announced patient referral partnerships with Caris Life Sciences and Tempus for its planned Phase 2 tumor-agnostic basket trial (MANTRA-2) - Plan to commence Phase 2 clinical trial (MANTRA-3) for milademetan in Merkel cell carcinoma (MCC) in mid-2022, replacing the intimal sarcoma trial[106](index=106&type=chunk)[109](index=109&type=chunk) - Announced patient referral partnership with Caris Life Sciences for the planned Phase 2 MDM2-amplified tumor-agnostic basket trial (MANTRA-2)[110](index=110&type=chunk) - Announced genomic analysis platform agreement with Tempus for centralized tumor testing and patient matching services for the MANTRA-2 trial[111](index=111&type=chunk) - First patient randomized in the multicenter, open-label, Phase 3 registrational trial (MANTRA) evaluating milademetan for de-differentiated liposarcoma (DD LPS) in July 2021[110](index=110&type=chunk) [Our Development Pipeline](index=23&type=section&id=Our%20Development%20Pipeline) The company's pipeline focuses on genetically selecting patients for targeted therapies. Milademetan, an MDM2 inhibitor, is in Phase 3 for DD LPS and has planned Phase 2 trials for tumor-agnostic solid tumors (MANTRA-2) and MCC (MANTRA-3). The preclinical RAD52 program targets DNA damage repair in HRD+ tumors - Development pipeline targets oncogenic drivers with differentiated therapies, using genetic selection for patients[112](index=112&type=chunk) - Retains global development and commercialization rights to all product candidates[112](index=112&type=chunk) [Overview of Milademetan](index=23&type=section&id=Overview%20of%20Milademetan) Milademetan, an oral MDM2 inhibitor, is being developed for MDM2-dependent cancers, leveraging a rationally designed dosing schedule to mitigate hematologic toxicities. It is in a pivotal Phase 3 trial (MANTRA) for DD LPS, with top-line data anticipated in 2023, and Phase 2 trials (MANTRA-2, MANTRA-3) planned for MDM2-amplified solid tumors and MCC, respectively - Milademetan is a small molecule, oral inhibitor of MDM2, developed for MDM2-dependent cancers[113](index=113&type=chunk) - A rationally designed dosing schedule aims to reduce toxicities while preserving activity due to milademetan's rapid plasma clearance and lack of drug accumulation[113](index=113&type=chunk) - Pivotal Phase 3 registrational trial (MANTRA) for de-differentiated liposarcoma (DD LPS) commenced in July 2021, with top-line data anticipated in 2023[115](index=115&type=chunk)[116](index=116&type=chunk) - Phase 2 tumor-agnostic basket trial (MANTRA-2) for MDM2-amplified advanced solid tumors is anticipated to commence in Q4 2021, with interim analysis in H2 2022[119](index=119&type=chunk) - Phase 2 clinical trial (MANTRA-3) for Merkel cell carcinoma (MCC) refractory to immune checkpoint inhibition is planned for mid-2022[118](index=118&type=chunk) [Overview of RAD52](index=24&type=section&id=Overview%20of%20RAD52) The preclinical RAD52 program targets the DNA damage repair pathway, aiming to induce synthetic lethality in HRD+ cancer cells (e.g., BRCA1/2 mutations) or those relapsing on PARP inhibitors. Lead candidate selection is expected in 2022 - Preclinical program focused on targeting RAD52 in the DNA damage repair pathway[120](index=120&type=chunk) - Aims to treat patients with molecularly diagnosed HRD+ (e.g., BRCA1/2 mutations) or those relapsed on PARP inhibitor therapy[120](index=120&type=chunk) - Lead candidate selection for RAD52 inhibitors is expected in 2022[123](index=123&type=chunk) [Collaboration and License Agreements](index=25&type=section&id=Collaboration%20and%20License%20Agreements) The company is party to several license agreements for its product candidates and development programs, as detailed in Note 7 to the Condensed Financial Statements - The company has license agreements for in-licensed product candidates and development programs[124](index=124&type=chunk) - Details of these agreements are provided in Note 7 to the Condensed Financial Statements[124](index=124&type=chunk) [Components of Our Results of Operations](index=25&type=section&id=Components%20of%20Our%20Results%20of%20Operations) This section outlines the components of the company's financial results, primarily focusing on operating expenses (R&D and G&A) as it has not generated product revenue. It details the types of costs included in R&D and G&A - No revenue from product sales, licenses, or collaborations to date, and none expected in the foreseeable future[125](index=125&type=chunk) - Operating expenses consist solely of research and development costs (including in-process R&D acquisition) and general and administrative costs[126](index=126&type=chunk) [Revenue](index=25&type=section&id=Revenue) The company has not generated any revenue from product sales, licenses, or collaborations since its inception and does not anticipate doing so in the foreseeable future, as it is still in the development phase for its product candidates - No revenue generated from product sales, licenses, or collaborations to date[125](index=125&type=chunk) - Does not expect to generate revenue from product sales in the foreseeable future[125](index=125&type=chunk) [Operating Expenses](index=25&type=section&id=Operating%20Expenses) Operating expenses are categorized into research and development (R&D) and general and administrative (G&A) costs, which are expensed as incurred - Operating expenses since inception have consisted solely of research and development costs and general and administrative costs[126](index=126&type=chunk) [Research and Development Expenses](index=25&type=section&id=Research%20and%20Development%20Expenses) R&D expenses, recognized as incurred, include personnel costs, preclinical study expenses, clinical trial costs (CROs, consultants), drug manufacturing, regulatory compliance, and license fees/milestone payments. The company expects these expenses to increase significantly as it expands its product candidate development - R&D expenses are recognized as incurred and include salaries, preclinical/clinical study costs, manufacturing, regulatory costs, and license/milestone payments[127](index=127&type=chunk)[128](index=128&type=chunk) - External development costs are tracked by product candidate, but internal costs are not allocated to specific programs[128](index=128&type=chunk) Research and Development Expenses by Category (in thousands) | Category (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Milademetan | $10,366 | $5,493 | $16,603 | $5,493 | | Other clinical candidate | $209 | $2,129 | $1,546 | $5,364 | | Unallocated internal R&D costs | $4,709 | $271 | $7,952 | $338 | | Total R&D expenses | $15,284 | $7,893 | $26,101 | $11,195 | - R&D expenses are expected to increase substantially as development of product candidates expands[129](index=129&type=chunk) [General and Administrative Expenses](index=26&type=section&id=General%20and%20Administrative%20Expenses) G&A expenses include personnel costs, legal fees, professional fees (accounting, consulting), and facility costs. These expenses are expected to increase due to continued R&D, pre-commercial activities, and public company compliance requirements - G&A expenses include salaries, stock-based compensation, legal fees, professional fees, and facility costs[131](index=131&type=chunk) - G&A expenses are expected to increase due to continued R&D, pre-commercial preparation, and public company operating costs[131](index=131&type=chunk) [Interest Income](index=26&type=section&id=Interest%20Income) Interest income is generated from the company's available-for-sale securities - Interest income consists of interest on available-for-sale securities[132](index=132&type=chunk) [Interest Expense](index=26&type=section&id=Interest%20Expense) The company had no interest expense for the nine months ended September 30, 2021. Interest expense for the prior year period was related to outstanding convertible promissory notes - No interest expense for the nine months ended September 30, 2021[133](index=133&type=chunk) - Interest expense in 2020 was from outstanding convertible promissory notes[133](index=133&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) This section provides a detailed comparison of the company's financial performance for the three and nine months ended September 30, 2021, versus 2020, highlighting significant increases in R&D and G&A expenses, leading to higher net losses [Comparison of Three and Nine Months Ended September 30, 2021 and 2020](index=27&type=section&id=Comparison%20of%20Three%20and%20Nine%20Months%20Ended%20September%2030%2C%202021%20and%202020) The company's net loss increased significantly for both the three and nine months ended September 30, 2021, primarily driven by higher research and development and general and administrative expenses Operating Results Comparison (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | Change (3 Months) | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change (9 Months) | | :----- | :-------------------------- | :-------------------------- | :---------------- | :-------------------------- | :-------------------------- | :---------------- | | Research and development | $15,284 | $7,893 | $7,391 | $26,101 | $11,195 | $14,906 | | General and administrative | $3,154 | $591 | $2,563 | $7,334 | $2,311 | $5,023 | | Total operating expenses | $18,438 | $8,484 | $9,954 | $33,435 | $13,506 | $19,929 | | Net loss | $(18,426) | $(10,446) | $(7,980) | $(33,409) | $(15,640) | $(17,769) | [Research and Development Expenses](index=27&type=section&id=Research%20and%20Development%20Expenses) R&D expenses increased significantly for both the three and nine months ended September 30, 2021, primarily due to a $5.5 million milestone payment to Daiichi Sankyo, increased costs for the milademetan Phase 3 study, and higher personnel costs, including stock-based compensation - R&D expenses increased by **$7.4 million** (3 months) and **$14.9 million** (9 months) YoY[136](index=136&type=chunk)[137](index=137&type=chunk) - Increase primarily due to **$5.5 million** milestone fees to Daiichi Sankyo and increased costs for the milademetan Phase 3 pivotal study[136](index=136&type=chunk)[137](index=137&type=chunk) - Non-cash stock-based compensation in R&D was **$0.7 million** (3 months) and **$1.4 million** (9 months) in 2021, up from **$0.2 million** and **$0.4 million** in 2020, respectively[136](index=136&type=chunk)[137](index=137&type=chunk) [General and Administrative Expenses](index=27&type=section&id=General%20and%20Administrative%20Expenses) G&A expenses rose substantially for both periods in 2021, driven by increased third-party costs (legal, consulting, accounting, audit) associated with public company compliance and growth in headcount and related personnel costs - G&A expenses increased by **$2.6 million** (3 months) and **$5.0 million** (9 months) YoY[138](index=138&type=chunk)[139](index=139&type=chunk) - Increase primarily due to higher third-party G&A costs (legal, consulting, accounting, audit) related to public company compliance and increased headcount[138](index=138&type=chunk)[139](index=139&type=chunk) - Non-cash stock-based compensation in G&A was approximately **$0.1 million** (3 months) and **$0.4 million** (9 months) in 2021, up from **$0.1 million** and **$0.2 million** in 2020, respectively[138](index=138&type=chunk)[139](index=139&type=chunk) [Other (Income) Expense](index=28&type=section&id=Other%20(Income)%20Expense) Other income (expense), net, for both periods in 2021 and 2020, primarily reflects interest income, interest expense on convertible promissory notes, and changes in their fair value, with nominal amounts in 2021 - Other income (expense), net, includes interest income, interest expense on convertible promissory notes, and changes in their fair value[141](index=141&type=chunk) - Nominal amounts for other income (expense) in 2021 compared to 2020, which included significant changes in fair value of convertible promissory notes[141](index=141&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) The company has incurred significant operating losses and expects this to continue, requiring additional capital for R&D and public company operations. It raised $121.5 million net from its April 2021 IPO, bringing cash, cash equivalents, and short-term investments to $150.1 million as of September 30, 2021, which is estimated to fund operations for at least the next twelve months - Incurred significant operating losses since inception and expects to continue incurring losses[142](index=142&type=chunk) - Raised **$121.5 million** net proceeds from IPO in April 2021[143](index=143&type=chunk) - Cash, cash equivalents, and short-term investments totaled **$150.1 million** as of September 30, 2021[143](index=143&type=chunk) - Existing capital is estimated to be sufficient for at least the next twelve months, but additional capital will be required for future R&D[143](index=143&type=chunk) [Future Funding Requirements](index=28&type=section&id=Future%20Funding%20Requirements) The company anticipates substantial increases in expenses for ongoing and new clinical trials for milademetan, preclinical research for RAD52, and general public company operating costs. Future capital needs are highly dependent on development progress, regulatory outcomes, and potential collaborations, with no assurance of profitability or positive cash flow - Expenses are expected to increase substantially due to ongoing and new clinical trials for milademetan, preclinical research for RAD52, and public company operating costs[144](index=144&type=chunk) - Future capital requirements depend on the scope, progress, and costs of clinical trials, regulatory review, intellectual property, and potential acquisitions/collaborations[146](index=146&type=chunk) - Development is lengthy, expensive, and uncertain; no assurance of marketing approval or commercial success[147](index=147&type=chunk) - Will need substantial additional funds, potentially through equity/debt financings or collaborations, which may dilute stockholders or involve relinquishing rights[149](index=149&type=chunk) [Cash Flows](index=30&type=section&id=Cash%20Flows) Net cash used in operating activities increased significantly to $27.7 million for the nine months ended September 30, 2021, primarily due to higher net loss and R&D expenses. Investing activities used $139.5 million, mainly for short-term investments. Financing activities provided $121.6 million, predominantly from the IPO Cash Flow Summary (in thousands) | Activity | 9 Months Ended Sep 30, 2021 (in thousands) | 9 Months Ended Sep 30, 2020 (in thousands) | | :------- | :-------------------------- | :-------------------------- | | Operating activities | $(27,704) | $(6,775) | | Investing activities | $(139,480) | $(5,156) | | Financing activities | $121,579 | $69,518 | | Net (decrease) increase in cash and cash equivalents | $(45,605) | $57,587 | [Operating Activities](index=30&type=section&id=Operating%20Activities) Net cash used in operating activities for the nine months ended September 30, 2021, was $27.7 million, primarily driven by a net loss of $33.4 million from R&D and G&A expenses, partially offset by non-cash adjustments and changes in operating assets/liabilities - Net cash used in operating activities was **$27.7 million** for the nine months ended September 30, 2021, primarily due to a **$33.4 million** net loss[151](index=151&type=chunk) - Net cash used in operating activities was **$6.8 million** for the nine months ended September 30, 2020, due to a **$15.6 million** net loss[152](index=152&type=chunk) [Investing Activities](index=30&type=section&id=Investing%20Activities) Net cash used in investing activities for the nine months ended September 30, 2021, was $139.5 million, mainly due to $136.9 million in purchases of available-for-sale securities and a $2.5 million payment for in-process R&D - Net cash used in investing activities was **$139.5 million** for the nine months ended September 30, 2021[153](index=153&type=chunk) - This includes **$136.9 million** for purchases of short-term investments and **$2.5 million** for in-process R&D expense[153](index=153&type=chunk) [Financing Activities](index=31&type=section&id=Financing%20Activities) Net cash provided by financing activities for the nine months ended September 30, 2021, was $121.5 million, primarily from the net proceeds of the IPO. In the prior year, financing was mainly from convertible promissory notes and preferred stock issuance - Net cash provided by financing activities was **$121.5 million** for the nine months ended September 30, 2021, primarily from IPO net proceeds[154](index=154&type=chunk) - Net cash provided by financing activities was **$69.5 million** for the nine months ended September 30, 2020, from convertible promissory notes (**$6.4 million**) and preferred stock issuance (**$63.2 million**)[155](index=155&type=chunk) [Contractual Obligations and other Commitments](index=31&type=section&id=Contractual%20Obligations%20and%20other%20Commitments) There were no material changes to the company's principal contractual obligations and commitments during the period ended September 30, 2021, compared to those reported in its IPO prospectus - No material changes to contractual obligations and commitments during the period ended September 30, 2021[156](index=156&type=chunk) [Critical Accounting Policies and Use of Estimates](index=31&type=section&id=Critical%20Accounting%20Policies%20and%20Use%20of%20Estimates) There have been no significant changes to the company's critical accounting policies from those disclosed in its IPO prospectus, except as noted in Note 2 of the condensed financial statements - No significant changes to critical accounting policies, except as described in Note 2[157](index=157&type=chunk) [Emerging Growth Company Status](index=31&type=section&id=Emerging%20Growth%20Company%20Status) The company is an "emerging growth company" under the JOBS Act, allowing it to take advantage of reduced reporting requirements, including an extended transition period for new accounting standards and exemption from auditor attestation of internal control over financial reporting. This status will continue until December 31, 2026, or earlier if certain revenue or market capitalization thresholds are met - The company is an "emerging growth company" (EGC) under the JOBS Act[158](index=158&type=chunk) - Elected to use the extended transition period for complying with new or revised accounting standards[158](index=158&type=chunk) - Exempt from auditor attestation of internal control over financial reporting under Sarbanes-Oxley Act Section 404(b)[158](index=158&type=chunk) - EGC status will continue until the earliest of December 31, 2026, or meeting certain revenue/market value thresholds[159](index=159&type=chunk) [Recent Accounting Pronouncements](index=31&type=section&id=Recent%20Accounting%20Pronouncements) A description of recent accounting pronouncements that may impact the company's financial position, results of operations, or cash flows is provided in Note 2 to the unaudited condensed financial statements - Recent accounting pronouncements are discussed in Note 2 of the unaudited condensed financial statements[160](index=160&type=chunk) [Off-Balance Sheet Arrangements](index=31&type=section&id=Off-Balance%20Sheet%20Arrangements) The company did not have any off-balance sheet arrangements during the periods presented or currently - No off-balance sheet arrangements existed during the periods presented or currently[161](index=161&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Rain Therapeutics Inc. is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk[162](index=162&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and Chief Accounting Officer, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2021. No material changes in internal control over financial reporting were identified during the quarter [Limitations on Effectiveness of Controls and Procedures](index=32&type=section&id=Limitations%20on%20Effectiveness%20of%20Controls%20and%20Procedures) Management acknowledges that controls and procedures, regardless of design, can only provide reasonable assurance of achieving objectives due to inherent limitations and resource constraints requiring judgment in cost-benefit evaluation - Controls and procedures provide only reasonable assurance due to inherent limitations and resource constraints[163](index=163&type=chunk) [Evaluation of Disclosure Controls and Procedures](index=32&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) The CEO and Chief Accounting Officer evaluated the effectiveness of disclosure controls and procedures as of September 30, 2021, and concluded they were effective at the reasonable assurance level - Disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level as of September 30, 2021[164](index=164&type=chunk) [Changes in Internal Control over Financial Reporting](index=32&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) No changes in internal control over financial reporting were identified during the quarter ended September 30, 2021, that materially affected or are reasonably likely to materially affect the company's internal control over financial reporting - No material changes in internal control over financial reporting occurred during the quarter ended September 30, 2021[165](index=165&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings - No legal proceedings were reported[167](index=167&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 - No material changes to risk factors from the prior Quarterly Report on Form 10-Q for Q1 2021[168](index=168&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company completed its IPO on April 27, 2021, issuing 7,352,941 shares of common stock at $17.00 per share, plus an additional 492,070 shares from the underwriters' option, generating net proceeds of $121.5 million. These proceeds are being used to fund clinical trials for milademetan (Phase 3 in LPS, Phase 2 tumor-agnostic, and Phase 2 in MCC, replacing intimal sarcoma), manufacturing, and general corporate purposes - IPO completed on April 27, 2021, with 7,352,941 shares sold at $17.00/share, plus 492,070 shares from underwriters' option[169](index=169&type=chunk) - Net proceeds from IPO totaled approximately **$121.5 million**[171](index=171&type=chunk) - Proceeds are used to fund a pivotal Phase 3 trial in LPS, a Phase 2 tumor-agnostic basket trial, and a Phase 2 trial in Merkel cell carcinoma (replacing intimal sarcoma) for milademetan, as well as manufacturing and general corporate purposes[172](index=172&type=chunk) [Item 3. Defaults Upon Senior Securities](index=33&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - No defaults upon senior securities were reported[173](index=173&type=chunk) [Item 4. Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reported no mine safety disclosures - No mine safety disclosures were reported[174](index=174&type=chunk) [Item 5. Other Information](index=33&type=section&id=Item%205.%20Other%20Information) The company reported no other information - No other information was reported[174](index=174&type=chunk) [Item 6. Exhibits](index=34&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed or furnished as part of the Quarterly Report on Form 10-Q, including organizational documents, investor agreements, certifications, and XBRL documents - Lists exhibits filed or furnished, including Amended and Restated Certificate of Incorporation, Bylaws, Form of Common Stock Certificate, Investors' Rights Agreement, Executive Severance Plan, and various certifications and XBRL documents[177](index=177&type=chunk) [Signatures](index=35&type=section&id=Signatures) The report is duly signed on behalf of Rain Therapeutics Inc. by its Chairman and Chief Executive Officer, Avanish Vellanki, and its Senior Vice President of Finance and Administration, Nelson Cabatuan, on November 10, 2021 - Report signed by Avanish Vellanki (Chairman and CEO) and Nelson Cabatuan (SVP of Finance and Administration) on November 10, 2021[181](index=181&type=chunk) ```

Table of Contents 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: 001-40356 Rain Therapeutics Inc. (Exact Name of Registrant as Specified in its Charter) ( State or other jurisdictio ...

Table of Contents 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: 333-254998 Rain Therapeutics Inc. (Exact Name of Registrant as Specified in its Charter) Indicate by check mark whe ...