SpringWorks Therapeutics(SWTX) - 2021 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for the three months ended March 31, 2021 Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for SpringWorks Therapeutics, Inc. for the three-month period ended March 31, 2021 Condensed Consolidated Balance Sheets This statement provides a snapshot of the company's assets, liabilities, and equity as of March 31, 2021, and December 31, 2020 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $95,426 | $147,089 | | Marketable securities | $445,616 | $414,731 | | Total Assets | $554,588 | $576,191 | | Total current liabilities | $18,729 | $17,610 | | Total Liabilities | $19,891 | $19,133 | | Total Stockholders' Equity | $534,697 | $557,058 | Condensed Consolidated Statements of Operations This statement details the company's revenues, expenses, and net loss for the three months ended March 31, 2021, and 2020 Statement of Operations (in thousands, except per-share data) | Metric | Three Months Ended Mar 31, 2021 | Three Months Ended Mar 31, 2020 | | :--- | :--- | :--- | | Research and development | $17,375 | $9,727 | | General and administrative | $12,381 | $6,403 | | Total operating expenses | $29,756 | $16,130 | | Loss from operations | ($29,756) | ($16,130) | | Net loss | ($29,787) | ($15,294) | | Net loss per share, basic and diluted | ($0.62) | ($0.37) | Condensed Consolidated Statements of Comprehensive Loss This statement presents the net loss and other comprehensive income/loss components for the three months ended March 31, 2021, and 2020 Comprehensive Loss (in thousands) | Metric | Three Months Ended Mar 31, 2021 | Three Months Ended Mar 31, 2020 | | :--- | :--- | :--- | | Net loss | ($29,787) | ($15,294) | | Unrealized gain on marketable securities, net | $12 | $0 | | Comprehensive loss | ($29,775) | ($15,294) | Condensed Consolidated Statements of Stockholders' Equity This statement outlines changes in stockholders' equity, including net loss and stock-based compensation, for the three months ended March 31, 2021 - Total stockholders' equity decreased from $557.1 million at December 31, 2020, to $534.7 million at March 31, 2021, primarily due to the $29.8 million net loss, partially offset by $7.1 million in stock-based compensation expense[23] Condensed Consolidated Statements of Cash Flows This statement summarizes cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2021, and 2020 Cash Flow Summary (in thousands) | Activity | Three Months Ended Mar 31, 2021 | Three Months Ended Mar 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($21,104) | ($16,398) | | Net cash used in investing activities | ($30,918) | ($160) | | Net cash provided by financing activities | $359 | $6 | | Net decrease in cash and cash equivalents | ($51,663) | ($16,552) | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements - The company is a clinical-stage biopharmaceutical firm focused on rare diseases and cancer, with two late-stage product candidates: nirogacestat and mirdametinib[29] - As of March 31, 2021, the company had an accumulated deficit of $148.4 million and estimates its $541.0 million in cash, cash equivalents, and marketable securities are sufficient to fund operations for at least twelve months[30][31] - The company holds a 38.9% ownership interest in MapKure, a variable interest entity, and recorded an equity loss of $0.3 million for the quarter[49][50][53] - Stock-based compensation expense for Q1 2021 was $7.1 million ($4.8 million in G&A and $2.3 million in R&D), a significant increase from $1.4 million in Q1 2020[65] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance for Q1 2021, highlighting key clinical program advancements and the resulting increase in operating expenses Overview This overview highlights the company's strategic focus on advancing its lead product candidates and key clinical milestones - The company is advancing two lead product candidates, nirogacestat and mirdametinib, in potentially registrational trials for desmoid tumors and NF1-PN respectively[70][71][72] - Key clinical milestones include full enrollment of the Phase 3 DeFi trial for nirogacestat, with topline data expected in the second half of 2021, and the ongoing Phase 2b ReNeu trial for mirdametinib[71][72] - Nirogacestat is also being developed in combination with BCMA-directed therapies for multiple myeloma through industry collaborations[73] Results of Operations This section analyzes the financial results for the three months ended March 31, 2021, focusing on changes in operating expenses and net loss Comparison of Operating Results (in thousands) | Metric | Q1 2021 | Q1 2020 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Research and development | $17,375 | $9,727 | $7,648 | 79% | | General and administrative | $12,381 | $6,403 | $5,978 | 93% | | Total operating expenses | $29,756 | $16,130 | $13,626 | 84% | | Net loss | ($29,787) | ($15,294) | ($14,493) | 95% | - The 79% increase in R&D expense was driven by a $4.7 million increase in external drug manufacturing and trial costs and a $2.9 million increase in internal employee-related costs[85][86] - The 93% increase in G&A expense was primarily due to additional personnel hiring and increased stock-based compensation as operations expanded[88] Liquidity and Capital Resources This section assesses the company's financial resources, including cash position and its ability to fund future operations - The company had cash, cash equivalents, and marketable securities totaling $541.0 million as of March 31, 2021[91] - Management estimates the current liquidity position is sufficient to fund operating expenses through at least 2022[77][91] - Net cash used in operating activities was $21.1 million for the three months ended March 31, 2021, compared to $16.4 million for the same period in 2020[92][93] Item 3. Quantitative and Qualitative Disclosure About Market Risk The company's primary market risk exposure is to interest rate fluctuations on its portfolio of cash, cash equivalents, and marketable securities - The company's primary market risk is interest rate sensitivity on its cash, cash equivalents, and marketable securities, totaling $541.0 million as of March 31, 2021[109] - The portfolio consists of highly liquid money market funds and high-quality available-for-sale debt securities, with short-term maturities limiting material impact from interest rate changes[109][110] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2021, with no material changes in internal control over financial reporting - The company's management, with the participation of the CEO and CFO, concluded that disclosure controls and procedures were effective as of the end of the reporting period[111] - There were no material changes in internal control over financial reporting during the quarter[112] PART II. OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings This section states that SpringWorks Therapeutics is not currently a party to any material legal proceedings - As of the filing date, the company is not a party to any material legal proceedings[114] Item 1A. Risk Factors This section details significant risks facing the company, including dependency on lead product candidates, reliance on third parties, intellectual property, regulatory challenges, and financial needs Risks Related to Research and Development This section outlines risks associated with the clinical development and regulatory approval of the company's product candidates - The company's business is highly dependent on the success of its lead product candidates, nirogacestat and mirdametinib, with failure to commercialize them materially harming the business[118][123] - Interim and preliminary clinical trial data, such as the ReNeu trial update, may change and are not necessarily predictive of final results[129] - Developing product candidates in combination with other therapies introduces risks related to safety or supply issues of those combination products[132] Risks Related to Reliance on Third Parties This section addresses risks arising from the company's dependence on third-party organizations for clinical trials, manufacturing, and collaborations - The company relies on third-party contract research organizations (CROs) for clinical trials and third-party manufacturers for all preclinical and clinical product supplies[142][149] - Dependency on a small number of suppliers for materials and a single company for the API of each lead product candidate poses significant supply risks[155] - Unsuccessful or terminated collaborations, which are critical to the business, could adversely affect operations[157] Risks Related to Intellectual Property This section covers risks concerning the company's intellectual property, particularly its reliance on licensed patents and their expiration dates - The company depends on intellectual property licensed from third parties, including Pfizer, for its lead product candidates, and license termination would result in significant rights loss[163] - Key U.S. composition of matter patents are nearing expiration, with mirdametinib's patent expiring in 2021 and nirogacestat's in 2025[238] Risks Related to Government Regulation This section details regulatory and geopolitical risks, including manufacturing in China and India, approval process delays, and healthcare reforms - Manufacturing a portion of lead product candidates in China and India exposes the company to risks from trade wars, political unrest, or supply disruptions[175] - The lengthy and unpredictable regulatory approval process, potentially delayed by COVID-19 impacts on FDA inspections, poses significant challenges[271][275] - Ongoing and future healthcare legislative reforms, especially those targeting drug prices, could negatively impact coverage, reimbursement, and profitability[306][307] Risks Related to Managing Business and Operations This section addresses operational challenges, including the impact of the COVID-19 pandemic, building commercialization capabilities, and managing organizational growth - The COVID-19 pandemic could adversely impact business operations, causing delays in clinical trial enrollment, site initiation, and supply chain disruptions[331] - As a company with no commercialization history, building these capabilities requires significant investment and time with no guarantee of success[180] - The company will need to grow its organization and may experience difficulties in managing this growth, imposing significant responsibilities on management[176][177] Risks Related to Financial Position and Need for Additional Capital This section highlights financial risks, including a history of net losses, the need for additional capital, and potential dilution from future fundraising - The company has a history of significant net losses, with an accumulated deficit of $148.4 million as of March 31, 2021, and anticipates continued losses[187][188] - Additional capital will be required to fund operations and complete the development and commercialization of its product candidates[194] - Raising additional capital may cause dilution to existing stockholders, restrict operations, or require relinquishing rights to technologies or product candidates[196] Risks Related to Common Stock This section discusses risks associated with the company's common stock, including significant control by principal stockholders and potential stock price volatility - As of March 31, 2021, principal stockholders and management beneficially owned approximately 54.8% of outstanding stock, allowing significant control over stockholder approval matters[200] - The stock price is likely to be highly volatile due to factors such as clinical trial results, regulatory decisions, and broader market fluctuations[354] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section indicates that there were no unregistered sales of equity securities during the period covered by the report - None[370] Item 3. Defaults Upon Senior Securities This section indicates that there were no defaults upon senior securities during the period - None[371] Item 4. Mine Safety Disclosures This section is not applicable to the company - None[372] Item 5. Other Information This section indicates there is no other information to report for the period - None[373] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate governance documents and required certifications - The report includes standard corporate governance documents and required CEO/CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act[374]