10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________ to ___________________

Commission File Number: 001-39335

 

Repare Therapeutics Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Québec

Not applicable

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

7210 Frederick-Banting, Suite 100

St-Laurent, Québec, Canada

H4S 2A1

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code: (857) 412-7018

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common shares, no par value

 

RPTX

 

The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of November 10, 2021, there were 41,735,057 shares of the registrant’s common stock, no par value per share, outstanding.

 

 


 

Table of Contents

 

 

 

Page

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

1

SUMMARY RISK FACTORS

2

PART I.

FINANCIAL INFORMATION

3

Item 1.

Financial Statements (Unaudited)

3

 

Condensed Consolidated Balance Sheets

3

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

4

 

Condensed Consolidated Statements of Convertible Preferred Shares and Shareholders’ Equity (Deficit)

5

 

Condensed Consolidated Statements of Cash Flows

6

 

Notes to Unaudited Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

16

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

28

Item 4.

Controls and Procedures

29

PART II.

OTHER INFORMATION

30

Item 1.

Legal Proceedings

30

Item 1A.

Risk Factors

30

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

78

Item 3.

Defaults Upon Senior Securities

78

Item 4.

Mine Safety Disclosures

78

Item 5.

Other Information

78

Item 6.

Exhibits

79

Signatures

 

 

 

 

 

i


 

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future financial condition, future operations, research and development costs, plans and objectives of management, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “positioned,” “potential,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report on Form 10-Q, we caution you that these statements are based on a combination of facts and factors currently known by us and our expectations of the future, about which we cannot be certain.

The forward-looking statements in this Quarterly Report on Form 10-Q include, among other things, statements about:

the initiation, timing, progress and results of our current and future preclinical studies and clinical trials and related preparatory work and the period during which the results of the trials will become available, as well as our research and development programs;
our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;
our ability to obtain regulatory approval of RP-3500, RP-6306 and any of our current and future product candidates that we develop;
our ability to identify and develop additional product candidates using our SNIPRx platform;
business disruptions affecting the initiation, patient enrollment, development and operation of our clinical trials, including a public health emergency or pandemic, such as the coronavirus disease, or COVID-19 pandemic;
the impact of the ongoing COVID-19 pandemic on our operations, the continuity of our business, including our preclinical studies and clinical trials, general economic conditions and ability to raise additional capital;
our ability to enroll patients in clinical trials, to timely and successfully complete those trials and to receive necessary regulatory approvals;
the timing of completion of enrollment and availability of data from our current preclinical studies and clinical trials, including our Phase 1/2 clinical trials of RP-3500 and our Phase 1 clinical trial of RP-6306;
the expected timing of filings with regulatory authorities for any product candidates that we develop;
our expectations regarding the potential market size and the rate and degree of market acceptance for any product candidates that we develop;
the effects of competition with respect to RP-3500, RP-6306 or any of our other current or future product candidates, as well as innovations by current and future competitors in our industry;
our ability to fund our working capital requirements;
our intellectual property position, including the scope of protection we are able to establish, maintain and enforce for intellectual property rights covering our product candidates;
our financial performance and our ability to effectively manage our anticipated growth;
our ability to obtain additional funding for our operations; and
other risks and uncertainties, including those listed under the section titled “Risk Factors” in this Quarterly Report.

 

Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth, and involve known and unknown risks, uncertainties and other factors including, without limitation, risks, uncertainties and assumptions regarding the impact of the COVID-19 pandemic on our business, operations, strategy, goals and anticipated timelines, our ongoing and planned preclinical activities, our ability to initiate, enroll, conduct or complete ongoing and planned clinical trials, our timelines for regulatory submissions and our financial position that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You are urged to carefully review the disclosures we make concerning these risks and other factors that may affect our business and operating results in this Quarterly Report on Form 10-Q. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document. Except as required by law, we do not intend, and undertake no obligation, to update any forward-looking information to reflect events or circumstances.

 

1


 

SUMMARY RISK FACTORS

Investing in our common shares involves numerous risks, including the risks described in “Part II—Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q. Below are some of our principal risks, any one of which could materially adversely affect our business, financial condition, results of operations, and prospects:

Our limited operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability.
We will require substantial additional funding to finance our operations. If we are unable to raise capital when needed, we could be forced to delay, reduce, or terminate certain of our product development programs or other operations.
We are very early in our development efforts. If we are unable to advance RP-3500, RP-6306 or any of our other product candidates into and through clinical development, obtain regulatory approval and ultimately commercialize RP-3500, RP-6306 or any of our other product candidates, or experience significant delays in doing so, our business will be materially harmed.
Our business substantially depends upon the successful development of product candidates generated through the application of our SNIPRx platform, and in particular, our lead product candidate, RP-3500. If we are unable to obtain regulatory approval for, and successfully commercialize, products developed through the application of our SNIPRx platform, our business may be materially harmed.
The effects of health epidemics, including the ongoing COVID-19 coronavirus pandemic, in regions where we, or the third parties on which we rely, have business operations could adversely impact our business, including our preclinical studies and clinical trials. The COVID-19 pandemic could materially affect our operations, including at our offices in Montréal and in the Boston Metro Area, and at our clinical trial sites, as well as the business or operations of our CROs or other third parties with whom we conduct business.
The successful development of targeted therapeutics, including our portfolio of synthetic lethality small molecule inhibitors, as well as any related diagnostics, is highly uncertain.
The regulatory approval processes of the FDA and comparable foreign regulatory authorities are lengthy, time consuming and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for our product candidates, on a timely basis or at all, our business will be substantially harmed.
Synthetic lethality represents an emerging class of precision medicine targets, and negative perceptions of the efficacy, safety, or tolerability of this class of targets, including any that we develop, could adversely affect our ability to conduct our business, advance our product candidates or obtain regulatory approvals.
We may not be successful in applying our SNIPRx platform to discover synthetic lethality targets with therapeutic and commercial potential or in the discovery and development of commercially viable product candidates for us or our collaborators.
Difficulty in enrolling patients could delay or prevent clinical trials of our product candidates. We may find it difficult to enroll patients in our ongoing trials with the genomic alterations that these trials are designed to target.
We face substantial competition, which may result in others developing or commercializing drugs before or more successfully than us.
We rely on third parties to supply and manufacture our product candidates, and we expect to continue to rely on third parties to manufacture our products, if approved. The development of such product candidates and the commercialization of any products, if approved, could be stopped, delayed, or made less profitable if any such third party fails to provide us with sufficient quantities of product candidates or products, or fails to do so at acceptable quality levels or prices, or fails to maintain or achieve satisfactory regulatory compliance.
Our success depends in part on our ability to obtain intellectual property rights for our proprietary technologies and product candidates, as well as our ability to protect our intellectual property. It is difficult and costly to protect our proprietary rights and technology, and we may not be able to ensure their protection.
Our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel.
The trading price of our common shares has been and is likely to continue to be volatile and fluctuate substantially.

 

2


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Repare Therapeutics Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(Amounts in thousands of U.S. dollars, except share data)

 

 

 

As of
September 30,

 

 

As of
December 31,

 

 

 

2021

 

 

2020

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents

 

$

260,995

 

 

$

326,184

 

Marketable securities

 

 

7,194

 

 

 

7,526

 

Research and development tax credits receivable

 

 

2,317

 

 

 

2,011

 

Other receivables

 

 

767

 

 

 

4,153

 

Prepaid expenses

 

 

9,103

 

 

 

6,678

 

Total current assets

 

 

280,376

 

 

 

346,552

 

Property and equipment, net

 

 

4,165

 

 

 

3,948

 

Restricted cash

 

 

 

 

 

212

 

Operating lease right-of-use assets

 

 

7,253

 

 

 

4,674

 

Other assets

 

 

1,008

 

 

 

288

 

Deferred tax assets

 

 

2,843

 

 

 

1,412

 

TOTAL ASSETS

 

$

295,645

 

 

$

357,086

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

Accounts payable

 

$

1,860

 

 

$

2,251

 

Accrued expenses and other current liabilities

 

 

11,020

 

 

 

5,975

 

Operating lease liability, current portion

 

 

1,458

 

 

 

697

 

Deferred revenue, current portion

 

 

8,925

 

 

 

2,073

 

Income tax payable

 

 

147

 

 

 

18

 

Total current liabilities

 

 

23,410

 

 

 

11,014

 

Operating lease liability, net of current portion

 

 

5,623

 

 

 

3,308

 

Deferred revenue, net of current portion

 

 

48,359

 

 

 

55,934

 

TOTAL LIABILITIES

 

 

77,392

 

 

 

70,256

 

SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

Preferred shares, no par value per share; unlimited shares authorized
   as of September 30, 2021 and December 31, 2020, respectively;
0 shares issued
   and outstanding as of September 30, 2021, and December 31, 2020, respectively

 

 

 

 

 

 

Common shares, no par value per share; unlimited shares authorized as of
   September 30, 2021 and December 31, 2020;
37,133,938 and 36,902,924 shares
   issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

 

 

385,990

 

 

 

384,313

 

Additional paid-in capital

 

 

14,239

 

 

 

5,875

 

Accumulated deficit

 

 

(181,976

)

 

 

(103,358

)

Total shareholders’ equity

 

 

218,253

 

 

 

286,830

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

$

295,645

 

 

$

357,086

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

3


 

Repare Therapeutics Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(Amounts in thousands of U.S. dollars, except share and per share data)

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Collaboration agreements

 

$

278

 

 

$

 

 

$

723

 

 

$

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development, net of tax credits

 

 

25,361

 

 

 

10,091

 

 

 

62,075

 

 

 

27,674

 

General and administrative

 

 

6,596

 

 

 

3,996

 

 

 

18,574

 

 

 

9,551

 

Total operating expenses

 

 

31,957

 

 

 

14,087

 

 

 

80,649

 

 

 

37,225

 

Loss from operations

 

 

(31,679

)

 

 

(14,087

)

 

 

(79,926

)

 

 

(37,225

)

Other income (expense), net

 

 

 

 

 

 

 

 

 

 

 

 

Realized and unrealized gain (loss) on foreign exchange

 

 

33

 

 

 

290

 

 

 

(92

)

 

 

(846

)

Interest income

 

 

53

 

 

 

156

 

 

 

155

 

 

 

156

 

Other expense

 

 

(7

)

 

 

(4

)

 

 

(21

)

 

 

(10

)

Total other income (expense), net

 

 

79

 

 

 

442

 

 

 

42

 

 

 

(700

)

Loss before income taxes

 

 

(31,600

)

 

 

(13,645

)

 

 

(79,884

)

 

 

(37,925

)

Income tax recovery (expense)

 

 

708

 

 

 

(106

)

 

 

1,266

 

 

 

(229

)

Net loss and comprehensive loss

 

$

(30,892

)

 

$

(13,751

)

 

$

(78,618

)

 

$

(38,154

)

Net loss attributable to common shareholders—basic
   and diluted

 

$

(30,892

)

 

$

(13,751

)

 

$

(78,618

)

 

$

(38,154

)

Net loss per share attributable to common
   shareholders—basic and diluted

 

$

(0.83

)

 

$

(0.37

)

 

$

(2.12

)

 

$

(2.63

)

Weighted-average common shares outstanding—basic
  and diluted

 

 

37,122,668

 

 

 

36,756,694

 

 

 

37,026,116

 

 

 

14,486,896

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

4


 

Repare Therapeutics Inc.

Condensed Consolidated Statements of Convertible Preferred Shares and Shareholders’ Equity (Deficit)

(Unaudited)

(Amounts in thousands of U.S. dollars, except share data)

 

 

 

Convertible Preferred Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series A

 

 

Series B

 

 

Common Shares

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Additional
Paid-in
Capital

 

 

Accumulated
Deficit

 

 

Total
Shareholders’
Equity (Deficit)

 

Balance, December 31, 2019

 

 

11,090,135

 

 

$

53,749

 

 

 

10,468,258

 

 

$

82,248

 

 

 

1,528,374

 

 

$

1

 

 

$

3,811

 

 

$

(49,941

)

 

$

(46,129

)

Exercise of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

181,318

 

 

 

520

 

 

 

(196

)

 

 

 

 

 

324

 

Share-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

271

 

 

 

 

 

 

271

 

Net loss and comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,601

)

 

 

(12,601

)

Balance, March 31, 2020

 

 

11,090,135

 

 

$

53,749

 

 

 

10,468,258

 

 

$

82,248

 

 

 

1,709,692

 

 

$

521

 

 

$

3,886

 

 

$

(62,542

)

 

$

(58,135

)

Exercise of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

85,369

 

 

 

257

 

 

 

(93

)

 

 

 

 

 

164

 

Share-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

389

 

 

 

 

 

 

389

 

Issuance of common shares upon
   initial public offering, net of
   issuance costs of $
20,957

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,650,000

 

 

 

232,043

 

 

 

 

 

 

 

 

 

232,043

 

Conversion of convertible preferred
   shares into an equivalent number
   of common shares

 

 

(11,090,135

)

 

 

(53,749

)

 

 

(10,468,258

)

 

 

(82,248

)

 

 

21,558,393

 

 

 

135,997

 

 

 

 

 

 

 

 

 

135,997

 

Issuance of warrant and conversion
   into common shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

750,000

 

 

 

15,000

 

 

 

 

 

 

 

 

 

15,000

 

Net loss and comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,802

)

 

 

(11,802

)

Balance, June 30, 2020

 

 

 

 

$

 

 

 

 

 

$

 

 

 

36,753,454

 

 

$

383,818

 

 

$

4,182

 

 

$

(74,344

)

 

$

313,656

 

Exercise of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11,559

 

 

 

34

 

 

 

(12

)

 

 

 

 

 

22

 

Share-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

871

 

 

 

 

 

 

871

 

Net loss and comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,751

)

 

 

(13,751

)

Balance, September 30, 2020

 

 

 

 

$

 

 

 

 

 

$

 

 

 

36,765,013

 

 

$

383,852

 

 

$

5,041

 

 

$

(88,095

)

 

$

300,798

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2020

 

 

 

 

$

 

 

 

 

 

$

 

 

 

36,902,924

 

 

$

384,313

 

 

$

5,875

 

 

$

(103,358

)

 

$

286,830

 

Exercise of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

87,786

 

 

 

297

 

 

 

(114

)

 

 

 

 

 

183

 

Share-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,057

 

 

 

 

 

 

2,057

 

Net loss and comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(21,417

)

 

 

(21,417

)

Balance, March 31, 2021

 

 

 

 

$

 

 

 

 

 

$

 

 

 

36,990,710

 

 

$

384,610

 

 

$

7,818

 

 

$

(124,775

)

 

$

267,653

 

Exercise of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

115,497

 

 

 

731

 

 

 

(282

)

 

 

 

 

 

449

 

Share-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,183

 

 

 

 

 

 

3,183

 

Issuance of common shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,299

 

 

 

113

 

 

 

 

 

 

 

 

 

113

 

Net loss and comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(26,309

)

 

 

(26,309

)

Balance, June 30, 2021

 

 

 

 

$

 

 

 

 

 

$

 

 

 

37,109,506

 

 

$

385,454

 

 

$

10,719

 

 

$

(151,084

)

 

$

245,089

 

Exercise of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14,489

 

 

 

129

 

 

 

(49

)

 

 

 

 

 

80

 

Share-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,693

 

 

 

 

 

 

3,693

 

Issuance of common shares under the
   2020 Employee Share Purchase Plan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,943

 

 

 

407

 

 

 

(124

)

 

 

 

 

 

283

 

Net loss and comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(30,892

)

 

 

(30,892

)

Balance, September 30, 2021

 

 

 

 

$

 

 

 

 

 

$

 

 

 

37,133,938

 

 

$

385,990

 

 

$

14,239

 

 

$

(181,976

)

 

$

218,253

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

 

5


 

Repare Therapeutics Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Amounts in thousands of U.S. dollars)

 

 

 

Nine Months Ended
September 30,

 

 

 

2021

 

 

2020

 

Cash Flows From Operating Activities: