Erasca(US:ERAS)2021-11-09 16:00PART I—FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements, management's analysis of financial condition and operations, market risk disclosures, and internal controls Financial Statements This section presents the unaudited condensed consolidated financial statements, highlighting increased net loss, strengthened financial position post-IPO, and cash flow dynamics Condensed Consolidated Balance Sheets This section details the company's financial position, showing significant asset growth and a shift to positive stockholders' equity post-IPO Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $445,811 | $65,376 | | Total current assets | $492,313 | $119,990 | | Total assets | $521,948 | $124,825 | | Liabilities & Equity | | | | Total current liabilities | $19,588 | $13,680 | | Total liabilities | $38,957 | $17,404 | | Convertible preferred stock | $0 | $221,405 | | Total stockholders' equity (deficit) | $482,991 | ($113,984) | | Total liabilities, convertible preferred stock and stockholders' equity (deficit) | $521,948 | $124,825 | - Following the IPO in July 2021, all outstanding convertible preferred stock converted into 71,263,685 common shares, eliminating the liability27131 Condensed Consolidated Statements of Operations and Comprehensive Loss This section presents the company's operating results, showing a substantial increase in net loss driven by higher R&D and administrative expenses Condensed Consolidated Statements of Operations (in thousands) | Metric | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $19,951 | $9,068 | $49,794 | $19,485 | | General and administrative | $6,916 | $2,020 | $15,696 | $5,052 | | Contribution to Erasca Foundation | $17,497 | $0 | $17,497 | $0 | | Total operating expenses | $46,044 | $11,163 | $93,835 | $42,282 | | Net loss | ($46,069) | ($10,608) | ($92,300) | ($39,757) | | Net loss per share | ($0.46) | ($0.50) | ($1.90) | ($1.91) | Condensed Consolidated Statements of Cash Flows This section outlines cash flow activities, with significant cash generation from financing activities offsetting increased operating cash consumption Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($57,118) | ($19,591) | | Net cash used in investing activities | ($641) | ($87,767) | | Net cash provided by financing activities | $438,290 | $140,104 | | Net increase in cash, cash equivalents and restricted cash | $380,531 | $32,746 | - Financing activities were the primary cash source, driven by $317.0 million net IPO proceeds and $119.4 million from convertible preferred stock issuance1927 Notes to Condensed Consolidated Financial Statements This section provides detailed disclosures on accounting policies, financial components, and significant corporate events, including the IPO and R&D focus - The company, a clinical-stage precision oncology firm, has an accumulated deficit of $207.7 million as of September 30, 2021, due to significant operating losses since inception2425 - On July 20, 2021, the company completed its IPO, selling 21,562,500 common shares at $16.00 per share, generating $317.0 million in net proceeds27 - Asset acquisition and license agreements resulted in IPR&D expenses of $10.8 million for the nine months ended September 30, 2021, and $17.7 million for the same period in 202094104219 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's clinical oncology focus, increased operating losses due to R&D, and strengthened liquidity from the July 2021 IPO - The company focuses on RAS/MAPK pathway-driven cancer therapies, with a pipeline of 11 programs, including clinical-stage candidates ERAS-007 and ERAS-601171175 - Net loss for Q3 2021 was $46.1 million, up from $10.6 million in Q3 2020, with the nine-month net loss reaching $92.3 million from $39.8 million year-over-year183 - As of September 30, 2021, the company held $486.6 million in cash, cash equivalents, and investments, projected to fund operations for at least the next 24 months182185 Results of Operations This section analyzes the significant increase in operating expenses, primarily driven by higher R&D, G&A costs, and a one-time foundation contribution Comparison of Operating Expenses - Three Months Ended Sep 30 (in thousands) | Expense Category | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Research and development | $19,951 | $9,068 | $10,883 | | In-process research and development | $1,680 | $75 | $1,605 | | General and administrative | $6,916 | $2,020 | $4,896 | | Contribution to Erasca Foundation | $17,497 | $0 | $17,497 | | Total operating expenses | $46,044 | $11,163 | $34,881 | Comparison of Operating Expenses - Nine Months Ended Sep 30 (in thousands) | Expense Category | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Research and development | $49,794 | $19,485 | $30,309 | | In-process research and development | $10,848 | $17,745 | ($6,897) | | General and administrative | $15,696 | $5,052 | $10,644 | | Contribution to Erasca Foundation | $17,497 | $0 | $17,497 | | Total operating expenses | $93,835 | $42,282 | $51,553 | Liquidity and Capital Resources This section details the company's liquidity, primarily from IPO proceeds, with $486.6 million in cash and investments expected to fund operations for 24 months - The company completed its IPO in July 2021, raising $317.0 million in net proceeds223 - The company's $486.6 million in cash, cash equivalents, and investments as of September 30, 2021, are expected to fund operations for at least the next 24 months224 Quantitative and Qualitative Disclosures About Market Risk This section reports no material changes to the company's market risk exposures, including interest rate, foreign currency, and inflation risks - No material changes have occurred in the company's market risk profile regarding interest rates, foreign currency, or inflation since its Prospectus disclosures244 Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes in internal control over financial reporting - The principal executive and financial officers concluded the company's disclosure controls and procedures were effective as of the reporting period end246 - No material changes in internal control over financial reporting occurred during the quarter247 PART II—OTHER INFORMATION This section provides other required information, including legal proceedings, risk factors, equity sales, and exhibits Legal Proceedings The company is not currently involved in any material legal proceedings - As of the filing date, the company is not involved in any material legal proceedings250 Risk Factors No material changes have occurred to the risk factors previously disclosed in the prior quarterly report - No material changes have been made to the risk factors from the prior quarterly report251 Unregistered Sales of Equity Securities and Use of Proceeds This section reports no unregistered equity sales and details IPO proceeds of $345.0 million, with no funds used as of September 30, 2021 - The company's IPO in July 2021 generated $345.0 million in gross proceeds ($317.0 million net)181254 - As of September 30, 2021, no IPO proceeds have been used, and the planned use remains unchanged255 Defaults Upon Senior Securities This section is not applicable to the company's current financial status Mine Safety Disclosures This section is not applicable to the company's operations Other Information This section contains no other material information to report Exhibits This section lists exhibits filed with the Form 10-Q, including corporate documents and required CEO/CFO certifications