Repare Therapeutics(RPTX) - 2022 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's analysis of financial condition and results of operations Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Repare Therapeutics Inc. as of June 30, 2022, including balance sheets, statements of operations, and cash flows, with accompanying notes Condensed Consolidated Balance Sheets This statement provides a snapshot of the company's assets, liabilities, and shareholders' equity as of June 30, 2022, and December 31, 2021 Balance Sheet Summary (in thousands of U.S. dollars) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $275,834 | $334,427 | | Total current assets | $289,738 | $351,414 | | Total Assets | $308,044 | $368,715 | | Total current liabilities | $39,440 | $35,089 | | Total Liabilities | $82,527 | $80,294 | | Total Shareholders' Equity | $225,517 | $288,421 | - The company's cash and cash equivalents decreased by approximately $58.6 million during the first six months of 2022, primarily due to funding operating activities[13] Condensed Consolidated Statements of Operations and Comprehensive Loss This statement details the company's revenues, expenses, and net loss for the three and six months ended June 30, 2022 and 2021 Statement of Operations Summary (in thousands of U.S. dollars, except per share data) | Metric | Q2 2022 | Q2 2021 | Six Months 2022 | Six Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Collaboration Revenue | $679 | $279 | $1,087 | $445 | | R&D Expenses | $31,475 | $20,205 | $57,933 | $36,714 | | G&A Expenses | $7,938 | $6,741 | $16,717 | $11,978 | | Net Loss | $(38,093) | $(26,309) | $(72,850) | $(47,726) | | Net Loss Per Share | $(0.91) | $(0.71) | $(1.74) | $(1.29) | - Net loss increased significantly year-over-year for both the three and six-month periods, driven by a substantial rise in Research and Development expenses as the company advanced its clinical programs[15] Condensed Consolidated Statements of Cash Flows This statement summarizes the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2022 and 2021 Cash Flow Summary for Six Months Ended June 30 (in thousands of U.S. dollars) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(58,199) | $(32,285) | | Net cash used in investing activities | $(906) | $(889) | | Net cash provided by financing activities | $446 | $632 | | Net Decrease in Cash | $(58,593) | $(32,543) | - Cash used in operating activities increased by $25.9 million year-over-year, primarily due to higher net loss adjusted for non-cash items like share-based compensation[20] Notes to Unaudited Condensed Consolidated Financial Statements These notes provide detailed explanations of significant accounting policies, collaboration agreements, and subsequent events impacting the financial statements - The company entered into a significant collaboration and license agreement with Roche on June 1, 2022, for its product candidate camonsertib (RP-3500), including a $125 million upfront payment received in July 2022 and potential for up to $1.172 billion in milestones[61][64] - Revenue recognized during the period is from the collaboration agreement with Bristol-Myers Squibb (BMS), with $1.1 million recognized for the six months ended June 30, 2022, and $41.4 million in deferred revenue remaining on the balance sheet[44][46] - On August 4, 2022, the company entered into an "at-the-market" (ATM) sales agreement with Cowen and Company, allowing it to offer and sell up to $125.0 million of its common shares from time to time[66] - Share-based compensation expense for the six months ended June 30, 2022, was $9.5 million, a significant increase from $5.2 million in the prior-year period, reflecting increased headcount and equity awards[58][59] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's business overview, recent developments, financial results, and liquidity, highlighting the new Roche collaboration and funding outlook Overview and Recent Developments This section provides an overview of the company's precision oncology platform and recent progress in its clinical programs, including the Roche collaboration - The company is a clinical-stage precision oncology company using its proprietary SNIPRx platform to develop novel therapeutics based on synthetic lethality[68] - A worldwide license and collaboration agreement was closed with Roche for camonsertib (RP-3500), with Repare receiving a $125 million upfront payment and eligibility for up to $1.172 billion in milestones plus royalties[78][79] - The company is advancing RP-6306, a first-in-class oral PKMYT1 inhibitor, in multiple Phase 1 trials, with initial monotherapy data readout now expected in the first half of 2023 due to COVID-19 disruptions[80][85] - The pipeline is progressing with IND-enabling studies initiated for Polθ inhibitor RP-2119, with clinical trials planned for summer 2023[85] Results of Operations This section analyzes the drivers behind changes in collaboration revenue and operating expenses for the periods presented Comparison of Operating Expenses (in millions of U.S. dollars) | Expense Category | Six Months 2022 | Six Months 2021 | Change | Primary Driver | | :--- | :--- | :--- | :--- | :--- | | R&D, net of tax credits | $57.9 | $36.7 | +$21.2 | Increased development activities for RP-3500 and RP-6306 programs and higher personnel costs | | General & Administrative | $16.7 | $12.0 | +$4.7 | Increased personnel costs and professional fees related to public company status | - The increase in R&D expenses for the first six months of 2022 was driven by a $12.1 million increase in direct external costs for clinical programs (RP-6306: +$6.8M, RP-3500: +$4.0M, RP-2119: +$1.0M) and a $7.5 million increase in personnel-related costs[119] Liquidity and Capital Resources This section details the company's cash position, funding strategy, and outlook on its ability to finance future operations - As of June 30, 2022, the company had $282.1 million in cash, cash equivalents, and marketable securities[125] - Management believes that existing cash combined with the $125 million upfront payment from the Roche agreement (received in July 2022) will be sufficient to fund operations and capital expenditures into 2026[125] - The company anticipates increased cash tax payments in 2022 due to a change in U.S. tax law (IRC Section 174) requiring capitalization and amortization of R&D expenditures over five years, rather than immediate deduction[124] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk exposures are related to interest rate fluctuations on its cash and investments and foreign currency exchange rate volatility - The company is exposed to foreign currency risk from its Canadian operations, where a 10% depreciation of the U.S. dollar relative to the Canadian dollar would result in an approximate $0.1 million increase to the company's net loss[145] - Interest rate risk is considered minimal as investments are primarily in short-term U.S. Treasury bills and interest-bearing bank accounts[142] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2022 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2022[148] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[149] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, and other material information relevant to the company Item 1. Legal Proceedings The company reports that it is not currently a party to any material legal proceedings and is not aware of any pending or threatened legal actions - As of the filing date, the company is not involved in any material legal proceedings[152] Item 1A. Risk Factors This section outlines the numerous risks associated with investing in the company, including limited operating history, funding needs, and clinical development uncertainties - The company has a limited operating history, has incurred significant losses since inception ($283.1 million accumulated deficit as of June 30, 2022), and will require substantial additional funding to finance operations[154][158][162] - The business is substantially dependent on the successful development of product candidates from its SNIPRx platform, particularly RP-3500 and RP-6306, where failure or significant delays would materially harm the business[167][172] - The company faces risks from health epidemics like the COVID-19 pandemic, which could adversely impact clinical trial enrollment, site activation, and supply chains, potentially delaying program timelines[175][181] - The company relies on third parties for manufacturing (CMOs) and conducting clinical trials (CROs), where failure to perform or comply could stop or delay product development and commercialization[285][293] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities during the period and confirms consistent use of IPO proceeds - There has been no material change in the use of proceeds from the company's June 2020 IPO[412] Item 5. Other Information On August 4, 2022, the company entered into a Common Shares Sales Agreement with Cowen and Company, LLC, for an "at-the-market" offering - The company established an "at-the-market" (ATM) offering facility on August 4, 2022, allowing for the sale of up to $125.0 million in common shares[416]