Day One Biopharmaceuticals pany(DAWN) - 2024 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Interim Condensed Financial Statements (Unaudited) First product revenue of $8.2 million from OJEMDA and a $108.0 million PRV sale significantly reduced Q2 net loss to $4.4 million, increasing total assets to $400.4 million Condensed Balance Sheet Data (in thousands) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $239,616 | $230,784 | | Total current assets | $383,158 | $375,274 | | Total assets | $400,437 | $376,048 | | Liabilities & Equity | | | | Total current liabilities | $93,706 | $29,508 | | Total liabilities | $93,706 | $29,508 | | Total stockholders' equity | $306,731 | $346,540 | Condensed Statements of Operations (in thousands, except per share data) | Metric | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | :--- | | Product revenue, net | $8,192 | $— | $8,192 | $— | | Research and development | $92,106 | $32,182 | $132,316 | $60,010 | | Selling, general and administrative | $30,186 | $17,072 | $56,743 | $35,099 | | Loss from operations | $(114,807) | $(49,254) | $(181,574) | $(95,109) | | Gain from sale of priority review voucher | $108,000 | $— | $108,000 | $— | | Net loss | $(4,407) | $(45,863) | $(66,819) | $(88,256) | | Net loss per share, basic and diluted | $(0.05) | $(0.61) | $(0.77) | $(1.20) | Condensed Statements of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(98,858) | $(68,417) | | Net cash provided by investing activities | $106,345 | $9,081 | | Cash provided by financing activities | $1,345 | $163,285 | | Net increase in cash and cash equivalents | $8,832 | $103,949 | Notes to Condensed Financial Statements Notes detail OJEMDA revenue, key agreements like MabCare's $55.0 million upfront, and subsequent Ipsen licensing and $175.0 million private placement - The company began recognizing net product revenue from OJEMDA in May 2024 following its FDA approval in April 2024, recorded net of deductions[27][28] - Upon FDA approval of OJEMDA, the company capitalized a $9.0 million milestone payment to Viracta, and following the $108.0 million PRV sale, an additional $8.1 million payment was made to Viracta and capitalized[31][44] - In June 2024, the company licensed DAY301 from MabCare Therapeutics for a $55.0 million upfront payment and potential future milestones of up to $1.152 billion[47][48] - Subsequent to quarter end, on July 23, 2024, the company licensed tovorafenib to Ipsen for ex-U.S. commercialization for an upfront fee of ~$71.0 million, a $40.0 million equity investment, and up to ~$350.0 million in milestones plus royalties[72] - On July 30, 2024, the company raised gross proceeds of approximately $175.0 million through a private placement of common stock and pre-funded warrants, which closed on August 1, 2024[73][74] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses OJEMDA's launch and initial revenue, increased R&D from a $55.0 million license payment, and a $108.0 million PRV sale improving net loss, with cash sufficient into 2026 Overview Day One, a commercial-stage biopharmaceutical company, launched OJEMDA™ after FDA approval for pLGG, based on FIREFLY-1, and is advancing FIREFLY-2, while also developing DAY301 - On April 23, 2024, the FDA granted accelerated approval to OJEMDA™ (tovorafenib) for relapsed or refractory pLGG with specific BRAF alterations, leading to its U.S. launch[76] - The approval was based on the FIREFLY-1 trial, showing a best overall response rate (ORR) of 51% in 76 evaluable patients, with a median duration of response of 13.8 months[76][77] - In June 2024, the company licensed DAY301, a novel ADC targeting PTK7, from MabCare Therapeutics for solid tumor development, with its IND cleared by the FDA in April 2024[78] - In July 2024, the company decided to close the FIRELIGHT-1 program, evaluating tovorafenib and pimasertib in MAPK-altered solid tumors, due to an unfavorable benefit/risk profile and market opportunity[78] Results of Operations Q2 2024 saw $8.2 million in OJEMDA revenue, R&D surged due to a $55.0 million MabCare payment, SG&A increased, and a $108.0 million PRV gain reduced net loss to $4.4 million Comparison of Results for the Three Months Ended June 30 (in thousands) | Metric | 2024 | 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Product revenue, net | $8,192 | $— | $8,192 | N/A | | Research and development | $92,106 | $32,182 | $59,924 | 186.2% | | Selling, general and administrative | $30,186 | $17,072 | $13,114 | 76.8% | | Gain from sale of PRV | $108,000 | $— | $108,000 | N/A | | Net loss | $(4,407) | $(45,863) | $41,456 | (90.4)% | - The $59.9 million increase in Q2 2024 R&D expenses was primarily driven by a $55.0 million upfront payment for the MabCare License Agreement[94][95] Comparison of Results for the Six Months Ended June 30 (in thousands) | Metric | 2024 | 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Product revenue, net | $8,192 | $— | $8,192 | N/A | | Research and development | $132,316 | $60,010 | $72,306 | 120.5% | | Selling, general and administrative | $56,743 | $35,099 | $21,644 | 61.7% | | Gain from sale of PRV | $108,000 | $— | $108,000 | N/A | | Net Loss | $(66,819) | $(88,256) | $21,437 | (24.3)% | - The $72.3 million increase in H1 2024 R&D expenses was primarily due to a $55.0 million upfront fee for the MabCare agreement and a $5.0 million amendment payment for the Viracta agreement[98][99] Liquidity and Capital Resources The company had $361.9 million in cash as of June 30, 2024, sufficient to fund operations into 2026, with $98.9 million cash used in operations and $106.3 million provided by investing activities - As of June 30, 2024, the company had $361.9 million in cash, cash equivalents, and short-term investments[101][125] - The company believes its existing cash and investments will be sufficient to fund operating expenses and capital requirements into 2026[125] - Net cash used in operating activities was $98.9 million for H1 2024, compared to $68.4 million in H1 2023, driven by higher operating expenses partially offset by the PRV sale gain[104] - Net cash provided by investing activities was $106.3 million in H1 2024, primarily due to $108.0 million in proceeds from the sale of the rare pediatric disease PRV[105] Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes occurred to the company's market risks from those described in its 2023 Form 10-K - There were no material changes to the company's market risks from those described in the 2023 Form 10-K[111] Item 4. Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2024, with no material changes in internal control over financial reporting - Management concluded that as of June 30, 2024, the company's disclosure controls and procedures were effective at a reasonable assurance level[112] - No changes in internal control over financial reporting occurred during the six months ended June 30, 2024, that materially affected or are reasonably likely to materially affect it[113] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently a party to any legal proceedings that would materially adversely affect its business - The company is not presently a party to any legal proceedings that would have a material adverse effect on its business[113] Item 1A. Risk Factors The company outlines significant risks including limited operating history, net losses, OJEMDA dependence, capital needs, clinical trial uncertainties, regulatory hurdles, manufacturing reliance, competition, and IP protection - The company has a limited operating history, incurred significant net losses since inception, and its near-term revenues are highly dependent on OJEMDA's successful commercialization[115][117][118] - Substantial additional capital will be required to finance operations, and failure to raise it could force delays or elimination of research, development, or commercialization efforts[115][124] - Clinical trials are expensive, time-consuming, and have uncertain outcomes, with earlier positive results not predictive of future results, and product candidates may not receive marketing authorization[115][126] - The company relies on third-party manufacturers, posing risks of production difficulties, supply disruptions, and compliance issues that could halt clinical trials or commercial sales[115][178] - Failure to obtain and maintain sufficient patent protection for products and technology could allow competitors to develop similar products, adversely affecting commercialization[116][198] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities The company reported no unregistered sales of equity securities, use of proceeds, or issuer purchases during the period - There were no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities in the reported period[249] Item 5. Other Information No other information was reported under this item for the period - No information was reported under Item 5[250] Item 6. Exhibits The report lists several exhibits, including the Asset Purchase Agreement, Exclusive License Agreement with MabCare, and required officer certifications - Key exhibits filed include the Asset Purchase Agreement from May 29, 2024, and the Exclusive License Agreement with MabCare Therapeutics from June 17, 2024[250] - Certifications by the Principal Executive Officer and Principal Financial Officer pursuant to Sarbanes-Oxley Act Sections 302 and 906 are included as exhibits[250][252]