Rain Oncology (RAIN) - 2022 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (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 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 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) 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] - Stock-based compensation expense of $2,659 thousand and proceeds from stock option exercises contributed to the increase in additional paid-in capital[14] Condensed Consolidated Statements of Cash Flows 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) 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 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] - The lead product candidate is milademetan, an oral inhibitor of mouse double minute 2 (MDM2), and a preclinical program focuses on inhibiting RAD52[18] - The company completed its initial public offering (IPO) on April 27, 2021, generating $121.5 million in net proceeds[20] - As of June 30, 2022, the company had an accumulated deficit of $124.97 million and expects to continue incurring net losses[23][25] - Management believes current cash, cash equivalents, and short-term investments will provide sufficient funds for at least twelve months from the filing date[26] Note 2 – Summary of Significant Accounting Policies 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] - Research and development costs are expensed as incurred[34] - Stock-based compensation expense is recognized over the requisite service period using the Black-Scholes option pricing model[36] - Comprehensive loss includes unrealized gains/losses from short-term investments[42] - The COVID-19 pandemic has not had a material impact on the company's expenditures to date[44] Note 3 – Fair Value Measurements 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] | 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 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][55] | 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] - 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][57] Note 5 - Condensed Consolidated Balance Sheet Details 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] - Depreciation expense for the six months ended June 30, 2022, was $44 thousand, an increase from $29 thousand in the prior year[58] Note 6 – Convertible Preferred Stock and Stockholders' Equity 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] - Non-Voting Common Stock can be converted to Voting Common Stock, subject to a Beneficial Ownership Limitation (initially 9.99%)[61] - No convertible preferred stock was outstanding as of June 30, 2022, following conversions during the IPO[70] | 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] Note 7 – License Agreements 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] - 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] - 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] - 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] - 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] Note 8 – Commitments and Contingencies 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][104] | 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] Note 9 – Employee Benefits 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] Note 10 – Net Loss Per Share 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][109] - Total anti-dilutive securities as of June 30, 2022, amounted to 2,456,138 shares[109] Note 11 – Subsequent Events 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] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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] - 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] - 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] - 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] 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] - To date, COVID-19 has not negatively impacted productivity, subject data, or clinical trial endpoints[119] - The ability to raise additional capital may be adversely impacted by potential worsening global economic conditions due to the pandemic[119] Recent Developments 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] - The trial enrolled 175 patients, five months ahead of previous guidance[120] Our Development Pipeline 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] - Milademetan, a potent MDM2 inhibitor, utilizes a rationally designed dosing schedule to potentially reduce toxicities while preserving activity[122] - 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][124][130] - 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] - 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][129] - 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][133] Milademetan and p53 Overview 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][135] - This mechanism triggers cancer cell cycle arrest or apoptosis in tumor cells with wild-type p53 and MDM2 overexpression[135] Collaboration and License Agreements 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] - Further details regarding these agreements are provided in Note 7 to the Condensed Consolidated Financial Statements[136] Components of Our Results of Operations 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] - Operating expenses consist solely of research and development (R&D) costs and general and administrative (G&A) costs[138] - R&D expenses are recognized as incurred and include salaries, preclinical/clinical study expenses, CRO fees, regulatory costs, license fees, and milestone payments[139][140] - G&A expenses include salaries, legal fees, professional fees, and facility-related costs[144] Results of Operations 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][148] - 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][150] - Interest income increased due to higher interest on money market accounts and short-term investments[145][151] Liquidity and Capital Resources 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] - 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][155] - As of June 30, 2022, cash, cash equivalents, and short-term investments totaled $105.8 million[156] - 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] - 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] Future Funding Requirements 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] - 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][161] - 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][163] Cash Flows 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] - 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] - 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] Obligations and other Commitments 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] - The company enters into cancelable contracts with CROs and other vendors for preclinical studies and clinical trials[171] - 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] Critical Accounting Policies and Use of Estimates 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] Accrued Liabilities 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] - 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] - Other accrued liabilities balances were $4.1 million as of June 30, 2022, compared to $5.7 million as of December 31, 2021[175] Stock-Based Compensation 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] - 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] - 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] Recent Accounting Pronouncements 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] Item 3. Quantitative and Qualitative Disclosures About Market Risk 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] Item 4. Controls and Procedures 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][185] - No material changes in internal control over financial reporting were identified during the quarter ended June 30, 2022[186] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company reported no legal proceedings during the period - No legal proceedings were reported[189] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - No defaults upon senior securities were reported[192] Item 4. Mine Safety Disclosures The company reported no mine safety disclosures during the period - No mine safety disclosures were reported[193] Item 5. Other Information The company reported no other information requiring disclosure under this item - No other information was reported under this item[194] Item 6. Exhibits 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] 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]