G1 Therapeutics(GTHX) - 2021 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) The unaudited condensed financial statements for the period ended September 30, 2021, reflect the company's transition to a commercial-stage entity Condensed Balance Sheets As of September 30, 2021, the company's total assets were $243.5 million, an increase from $228.6 million at year-end 2020 Condensed Balance Sheet Highlights (in thousands) | Account | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $212,089 | $207,306 | | Accounts Receivable | $5,240 | $237 | | Inventories | $1,375 | $— | | Total current assets | $232,983 | $216,392 | | Total assets | $243,497 | $228,552 | | Liabilities & Equity | | | | Total current liabilities | $26,839 | $23,443 | | Loan payable | $30,273 | $19,893 | | Total liabilities | $65,158 | $51,201 | | Accumulated deficit | $(544,439) | $(436,107) | | Total stockholders' equity | $178,339 | $177,351 | Condensed Statements of Operations For the third quarter of 2021, the company reported total revenues of $4.9 million, a significant shift from the prior year's $26.6 million which was primarily license revenue Statement of Operations Summary (in thousands, except per share data) | Metric | Q3 2021 | Q3 2020 | 9M 2021 | 9M 2020 | | :--- | :--- | :--- | :--- | :--- | | Product sales, net | $3,576 | $— | $6,717 | $— | | License revenue | $1,282 | $26,599 | $18,963 | $28,739 | | Total revenues | $4,858 | $26,599 | $25,680 | $28,739 | | R&D Expenses | $21,143 | $17,932 | $56,435 | $56,897 | | SG&A Expenses | $24,268 | $18,412 | $72,474 | $44,230 | | Loss from operations | $(41,144) | $(9,745) | $(104,871) | $(72,388) | | Net loss | $(42,468) | $(11,674) | $(108,332) | $(73,907) | | Net loss per share | $(1.00) | $(0.31) | $(2.60) | $(1.95) | Condensed Statements of Stockholders' Equity Total stockholders' equity increased slightly from $177.4 million at the end of 2020 to $178.3 million at September 30, 2021 - An at-the-market (ATM) public offering raised $86.4 million during the first nine months of 2021[14] - The net loss for the nine months ended September 30, 2021, was $108.3 million, which reduced stockholders' equity[11][14] Condensed Statements of Cash Flows For the nine months ended September 30, 2021, net cash used in operating activities was $97.4 million, a significant increase from $52.2 million in the prior-year period, reflecting higher net loss and changes in working capital Cash Flow Summary for Nine Months Ended Sep 30 (in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(97,448) | $(52,234) | | Net cash provided by investing activities | $— | $152 | | Net cash provided by financing activities | $102,106 | $21,216 | | Net change in cash | $4,658 | $(30,866) | | Cash at end of period | $212,464 | $238,842 | - Financing activities in 2021 included $86.4 million in net proceeds from a public offering and $10.0 million from a loan agreement[17] Notes to Unaudited Condensed Financial Statements The notes detail the company's business, accounting policies, and financial arrangements - The company's first product, COSELA™ (trilaciclib), was approved by the FDA on February 12, 2021, and became commercially available on March 2, 2021, for decreasing chemotherapy-induced myelosuppression in ES-SCLC patients[19][24] - The company has out-licensed global rights to lerociclib to EQRx and Genor Biopharma, and rights for trilaciclib in Greater China to Simcere[21][28][31] - Inventory costs began to be capitalized upon FDA approval of COSELA on February 12, 2021 Prior manufacturing costs were expensed as R&D[38][52] - Subsequent to the quarter end, on November 1, 2021, the company amended its loan agreement with Hercules Capital, increasing the total commitment to $150.0 million and drawing an additional $45.0 million[125] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's transition to a commercial-stage entity following the FDA approval and launch of COSELA Overview and Product Pipeline G1 Therapeutics is a commercial-stage biopharmaceutical company whose first product, COSELA (trilaciclib), was approved by the FDA in February 2021 to protect against chemotherapy-induced myelosuppression - COSELA™ (trilaciclib) was approved by the FDA on February 12, 2021, and is the first therapy to proactively protect bone marrow from chemotherapy damage[128][131] - The company is advancing trilaciclib in pivotal trials for Colorectal Cancer (PRESERVE 1) and metastatic Triple-Negative Breast Cancer (PRESERVE 2)[142][143][147] - The Phase 2 trial of trilaciclib in NSCLC was discontinued due to a strategic reassessment, with resources shifted to support two new Phase 2 trials initiating in Q4 2021: one for mechanism of action (MOA) and another in combination with an antibody-drug conjugate (ADC)[132][142] - The company is evaluating partnering options for its oral SERD, rintodestrant, and has out-licensed its oral CDK4/6 inhibitor, lerociclib, to EQRx and Genor Biopharma[133][153][154] Results of Operations For the third quarter of 2021, total revenue was $4.9 million, consisting of $3.6 million in COSELA product sales and $1.3 million in license revenue Comparison of Q3 Operations (in millions) | Metric | Q3 2021 | Q3 2020 | Change | | :--- | :--- | :--- | :--- | | Product Sales, Net | $3.6 | $0.0 | +$3.6 | | License Revenue | $1.3 | $26.6 | -$25.3 | | Total Revenues | $4.9 | $26.6 | -$21.7 | | R&D Expenses | $21.1 | $17.9 | +$3.2 | | SG&A Expenses | $24.3 | $18.4 | +$5.9 | | Net Loss | $(42.5) | $(11.7) | -$(30.8) | Comparison of 9-Month Operations (in millions) | Metric | 9M 2021 | 9M 2020 | Change | | :--- | :--- | :--- | :--- | | Product Sales, Net | $6.7 | $0.0 | +$6.7 | | License Revenue | $19.0 | $28.7 | -$9.7 | | Total Revenues | $25.7 | $28.7 | -$3.0 | | R&D Expenses | $56.4 | $56.9 | -$0.5 | | SG&A Expenses | $72.5 | $44.2 | +$28.3 | | Net Loss | $(108.3) | $(73.9) | -$(34.4) | - The 64% increase in SG&A expenses for the nine-month period was primarily due to a $15.1 million increase in commercialization activities for COSELA and a $10.4 million increase in personnel costs[195] Liquidity and Capital Resources As of September 30, 2021, the company had $212.1 million in cash and cash equivalents - The company held $212.1 million in cash and cash equivalents as of September 30, 2021[160][199] - Between January and February 2021, the company sold 3,513,027 shares under an ATM agreement, generating $86.4 million in net proceeds[203] - The company has a loan agreement with Hercules Capital, initially for up to $100.0 million, which was subsequently amended on Nov 1, 2021, to increase the total commitment to $150.0 million[205][125] - Management believes that existing cash and cash equivalents are sufficient to fund projected cash needs for at least the next 12 months[222] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk exposure relates to interest rate changes - The main market risk is interest rate sensitivity, affecting both interest income on cash equivalents ($212.1 million) and interest expense on the variable-rate loan with Hercules Capital[231][232] - The company does not believe inflation or foreign currency exchange rates had a material effect on its business during the period[234] Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of September 30, 2021 - Management concluded that disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2021[235] - New procedures and controls for net product sales and inventory were implemented during the quarter due to the commercial launch of COSELA[236] PART II. OTHER INFORMATION Risk Factors The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2020, and its Quarterly Report on Form 10-Q for the period ended March 31, 2021 - There have been no material changes in the risk factors from those set forth in the company's 2020 annual report on Form 10-K and the Q1 2021 Form 10-Q[239] Exhibits This section lists the exhibits filed with the Form 10-Q - Key exhibits filed include the 2021 Sales Force Inducement Equity Incentive Plan[241] - The Second Amendment to the Loan and Security Agreement with Hercules Capital, dated November 1, 2021, was filed as an exhibit[241]