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 June 30, 2022

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 July 31, 2022, there were 41,937,795 of the registrant’s common shares, 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 Shareholders’ Equity

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

80

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-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 evolving impact of the COVID-19 pandemic and any variants on our operations, the continuity of our business, including our preclinical studies and clinical trials, supply chains, general economic conditions and our 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 trial of RP-3500 and our Phase 1 clinical trials of RP-6306;
the expected timing of filings with regulatory authorities for any product candidates that we develop, including RP-2119;
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 our product candidates into and through clinical development, obtain regulatory approval and ultimately commercialize any of our 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 initial product candidates, RP-3500 and RP-6306. If we, or our collaborators, 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 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 and planned clinical 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.
Our current and future collaborations will be important to our business. If we are unable to enter into new collaborations, or if these collaborations are not successful, our business could be adversely affected.
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
June 30,

 

 

As of
December 31,

 

 

 

2022

 

 

2021

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents

 

$

275,834

 

 

$

334,427

 

Marketable securities

 

 

6,255

 

 

 

7,439

 

Research and development tax credits receivable

 

 

2,598

 

 

 

2,580

 

Income tax receivable

 

 

799

 

 

 

 

Other receivables

 

 

1,010

 

 

 

654

 

Prepaid expenses

 

 

3,242

 

 

 

6,314

 

Total current assets

 

 

289,738

 

 

 

351,414

 

Property and equipment, net

 

 

5,124

 

 

 

5,604

 

Operating lease right-of-use assets

 

 

6,456

 

 

 

7,491

 

Other assets

 

 

497

 

 

 

586

 

Deferred tax assets

 

 

6,229

 

 

 

3,620

 

TOTAL ASSETS

 

$

308,044

 

 

$

368,715

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

Accounts payable

 

$

4,991

 

 

$

2,302

 

Accrued expenses and other current liabilities

 

 

20,459

 

 

 

18,622

 

Operating lease liability, current portion

 

 

2,135

 

 

 

1,721

 

Deferred revenue, current portion

 

 

11,855

 

 

 

11,921

 

Income tax payable

 

 

 

 

 

523

 

Total current liabilities

 

 

39,440

 

 

 

35,089

 

Operating lease liability, net of current portion

 

 

4,495

 

 

 

5,592

 

Deferred revenue, net of current portion

 

 

38,592

 

 

 

39,613

 

TOTAL LIABILITIES

 

 

82,527

 

 

 

80,294

 

SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

Preferred shares, no par value per share; unlimited shares authorized
   as of June 30, 2022 and December 31, 2021, respectively;
0 shares issued
   and outstanding as of June 30, 2022, and December 31, 2021, respectively

 

 

 

 

 

 

Common shares, no par value per share; unlimited shares authorized as of
   June 30, 2022 and December 31, 2021;
41,923,472 and 41,850,162 shares
   issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

 

 

481,380

 

 

 

480,699

 

Additional paid-in capital

 

 

27,253

 

 

 

17,988

 

Accumulated deficit

 

 

(283,116

)

 

 

(210,266

)

Total shareholders’ equity

 

 

225,517

 

 

 

288,421

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

$

308,044

 

 

$

368,715

 

 

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
June 30,

 

 

Six Months Ended
June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Collaboration agreements

 

$

679

 

 

$

279

 

 

$

1,087

 

 

$

445

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development, net of tax credits

 

 

31,475

 

 

 

20,205

 

 

 

57,933

 

 

 

36,714

 

General and administrative

 

 

7,938

 

 

 

6,741

 

 

 

16,717

 

 

 

11,978

 

Total operating expenses

 

 

39,413

 

 

 

26,946

 

 

 

74,650

 

 

 

48,692

 

Loss from operations

 

 

(38,734

)

 

 

(26,667

)

 

 

(73,563

)

 

 

(48,247

)

Other income (expense), net

 

 

 

 

 

 

 

 

 

 

 

 

Realized and unrealized gain (loss) on foreign exchange

 

 

141

 

 

 

(94

)

 

 

124

 

 

 

(125

)

Interest income

 

 

544

 

 

 

38

 

 

 

673

 

 

 

102

 

Other expense

 

 

(11

)

 

 

(7

)

 

 

(19

)

 

 

(14

)

Total other income (expense), net

 

 

674

 

 

 

(63

)

 

 

778

 

 

 

(37

)

Loss before income taxes

 

 

(38,060

)

 

 

(26,730

)

 

 

(72,785

)

 

 

(48,284

)

Income tax recovery (expense)

 

 

(33

)

 

 

421

 

 

 

(65

)

 

 

558

 

Net loss and comprehensive loss

 

$

(38,093

)

 

$

(26,309

)

 

$

(72,850

)

 

$

(47,726

)

Net loss attributable to common shareholders—basic
   and diluted

 

$

(38,093

)

 

$

(26,309

)

 

$

(72,850

)

 

$

(47,726

)

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

 

$

(0.91

)

 

$

(0.71

)

 

$

(1.74

)

 

$

(1.29

)

Weighted-average common shares outstanding—basic
  and diluted

 

 

41,899,509

 

 

 

37,036,683

 

 

 

41,880,666

 

 

 

36,977,040

 

 

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

4


 

Repare Therapeutics Inc.

Condensed Consolidated Statements of Shareholders’ Equity

(Unaudited)

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

 

 

 

Common Shares

 

 

Additional
Paid-in
Capital

 

 

Accumulated
Deficit

 

 

Total
Shareholders’
Equity

 

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2021

 

 

41,850,162

 

 

$

480,699

 

 

$

17,988

 

 

$

(210,266

)

 

$

288,421

 

Exercise of stock options

 

 

12,235

 

 

 

46

 

 

 

(18

)

 

 

 

 

 

28

 

Share-based compensation expense

 

 

 

 

 

 

 

 

4,755

 

 

 

 

 

 

4,755

 

Issuance of common shares under the
   2020 Employee Share Purchase Plan

 

 

16,807

 

 

 

303

 

 

 

(90

)

 

 

 

 

 

213

 

Net loss and comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(34,757

)

 

 

(34,757

)

Balance, March 31, 2022

 

 

41,879,204

 

 

$

481,048

 

 

$

22,635

 

 

$

(245,023

)

 

$

258,660

 

Exercise of stock options

 

 

44,268

 

 

 

332

 

 

 

(127

)

 

 

 

 

 

205

 

Share-based compensation expense

 

 

 

 

 

 

 

 

4,745

 

 

 

 

 

 

4,745

 

Net loss and comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(38,093

)

 

 

(38,093

)

Balance, June 30, 2022

 

 

41,923,472

 

 

$

481,380

 

 

$

27,253

 

 

$

(283,116

)

 

$

225,517

 

 

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)

 

 

 

Six Months Ended
June 30,

 

 

 

2022

 

 

2021

 

Cash Flows From Operating Activities:

 

 

 

 

 

 

Net loss and comprehensive loss for the period

 

$

(72,850

)

 

$

(47,726

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Share-based compensation expense

 

 

9,500

 

 

 

5,240

 

Depreciation expense

 

 

1,039

 

 

 

734

 

Non-cash lease expense

 

 

1,091

 

 

 

748

 

Foreign exchange gain

 

 

(136

)

 

 

(13

)

Amortization of premiums on marketable securities

 

 

34

 

 

 

54

 

Deferred tax

 

 

(2,609

)

 

 

(626

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses

 

 

3,072

 

 

 

4,622

 

Research and development tax credits receivable

 

 

(31

)

 

 

(627

)

Other receivables

 

 

(358

)

 

 

556

 

Other non-current assets

 

 

89

 

 

 

 

Accounts payable

 

 

2,698

 

 

 

1,155

 

Accrued expenses and other current liabilities

 

 

3,334

 

 

 

4,509

 

Operating lease liability, current portion

 

 

460

 

 

 

(272

)

Income taxes

 

 

(1,322

)

 

 

44

 

Operating lease liability, net of current portion

 

 

(1,123

)

 

 

(238

)

Deferred revenue

 

 

(1,087

)

 

 

(445

)

Net cash used in operating activities

 

 

(58,199

)

 

 

(32,285

)

Cash Flows From Investing Activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(2,056

)

 

 

(1,201

)

Proceeds from maturities of marketable securities

 

 

5,150

 

 

 

3,750

 

Purchase of marketable securities

 

 

(4,000

)

 

 

(3,438

)

Net cash used in investing activities

 

 

(906

)

 

 

(889

)

Cash Flows From Financing Activities:

 

 

 

 

 

 

Proceeds from exercise of stock options

 

 

233

 

 

 

632

 

Proceeds from issuance of common stock under the 2020 Employee Share Purchase Plan

 

 

213

 

 

 

 

Net cash provided by financing activities

 

 

446

 

 

 

632

 

Effect of exchange rate fluctuations on cash held

 

 

66

 

 

 

(1

)

Net Decrease In Cash And Cash Equivalents And Restricted Cash

 

 

(58,593

)

 

 

(32,543

)

Cash and cash equivalents and restricted cash at beginning of period

 

 

334,427

 

 

 

326,396

 

Cash and cash equivalents and restricted cash at end of period

 

$

275,834

 

 

$

293,853

 

 

 

 

 

 

 

 

Reconciliation Of Cash And Cash Equivalents And Restricted Cash

 

 

 

 

 

 

Cash and cash equivalents

 

$

275,834

 

 

$

293,635

 

Restricted cash

 

 

 

 

 

218

 

Total cash and cash equivalents and restricted cash

 

$

275,834

 

 

$

293,853

 

 

 

 

 

 

 

 

Supplemental Disclosure Of Cash Flow Information:

 

 

 

 

 

 

Property and equipment purchases incurred but not yet paid

 

$

222

 

 

$

38

 

Right-of-use asset obtained in exchange for new operating lease liability

 

$

56

 

 

$

705

 

 

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

6


 

REPARE THERAPEUTICS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in U.S. dollars, unless otherwise specified)

1. Organization and Nature of Business

Repare Therapeutics Inc. (“Repare” or the “Company”) is a precision medicine oncology company focused on the development of synthetic lethality-based therapies for patients with cancer. The Company was incorporated under the Canada Business Corporations Act on September 6, 2016. On June 23, 2020, immediately prior to the completion of its initial public offering (the “IPO”), the Company was continued as a corporation under the Business Corporations Act (Québec). The Company’s common shares are listed on the Nasdaq Global Select Market under the ticker symbol “RPTX”.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and as amended by Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements as of and for the year ended December 31, 2021, and, in the opinion of management, reflect all adjustments, consisting of normal recurring adjustments, necessary for the fair presentation of the Company’s consolidated financial position as of June 30, 2022, the consolidated results of its operations for the three and six months ended June 30, 2022 and 2021, its statements of shareholders’ equity for the three and six months ended June 30, 2022 and 2021 and its consolidated cash flows for the six months ended June 30, 2022 and 2021.

These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the accompanying notes for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on March 1, 2022 (the “Annual Report”). The condensed consolidated balance sheet data as of December 31, 2021 presented for comparative purposes was derived from the Company’s audited consolidated financial statements but does not include all disclosures required by U.S. GAAP. The results for the three and six months ended June 30, 2022 are not necessarily indicative of the operating results to be expected for the full year or for any other subsequent interim period.

The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2021 included in the Annual Report. There have been no changes to the Company's significant accounting policies since the date of the audited consolidated financial statements for the year ended December 31, 2021 included in the Annual Report.

Principles of Consolidation

These unaudited condensed consolidated financial statements of the Company include the accounts of the Company and its wholly-owned subsidiary, Repare Therapeutics USA Inc. (“Repare USA”), which was incorporated under the laws of Delaware on June 1, 2017. The financial statements of Repare USA are prepared for the same reporting period as the parent company, using consistent accounting policies. All intra-group transactions, balances, income, and expenses are eliminated in full upon consolidation.

Smaller Reporting Company

We qualify as a “smaller reporting company” under the Exchange Act as of June 30, 2022 because the market value of our common shares held by non-affiliates was less than $560 million as of June 30, 2022 and our revenue for the year ended December 31, 2021 were less than $100 million. As a smaller reporting company, we may rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. For so long as we remain a smaller reporting company, we are permitted and intend to rely on such exemptions from certain disclosure and other requirements that are applicable to other public companies that are not smaller reporting companies.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in consolidated financial statements and accompanying notes. Significant estimates and

7


 

assumptions reflected in these unaudited condensed consolidated financial statements include, but are not limited to, estimates related to revenue recognition, accrued research and development expenses, share-based compensation, right-of-use assets and lease liabilities and income taxes. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. The Company bases its estimates on historical experience and other market specific or other relevant assumptions that it believes to be reasonable under the circumstances. Actual results could materially differ from those estimates. Changes in estimates are recorded in the period in which they become known.

COVID-19 Pandemic

With the continued spread of the ongoing COVID-19 pandemic, including variants of COVID-19, the Company established a cross-functional task force and has implemented business continuity plans designed to address and mitigate the impact of the COVID-19 pandemic on its employees and its business, including its preclinical studies and its ongoing and planned clinical trials. The Company has taken measures to secure its research and development activities, while work in its laboratories and facilities has been re-organized to reduce risk of COVID-19 transmission. While the Company is experiencing limited financial impacts at this time, given the global economic slowdown, the overall disruption of global healthcare systems and the other risks and uncertainties associated with the COVID-19 pandemic, the Company’s business, financial condition, and results of operations could be materially adversely affected. The Company cannot predict the ultimate impact, if any, of the COVID-19 pandemic related to both known and unknown risks, including future quarantines, closures and other restrictions resulting from the pandemic. The Company continues to monitor the COVID-19 pandemic as it evolves its business continuity plans, clinical development plans and response strategy.

The Company’s clinical trial sites may be affected by the COVID-19 outbreak due to prioritization of hospital resources toward the COVID-19 outbreak, travel or quarantine restrictions imposed by governments, and the inability to access sites for initiation, patient enrollment and monitoring. As a result, patient screening, new patient enrollment, monitoring and data collection may be affected or delayed. The Company is aware that several clinical sites involved in its clinical studies temporarily stopped or delayed enrolling new patients, with exemptions if appropriate, and it is possible that these or other clinical sites may be similarly affected in the future. These developments may delay the Company’s clinical trial timelines. Some of the Company’s third-party manufacturers, which it uses for the supply of materials for product candidates or other materials necessary to manufacture product to conduct preclinical tests and clinical trials, and contract research organizations may be impacted by COVID-19. Should they experience disruptions, such as temporary closures or suspension of services, the Company would likely experience delays in advancing clinical trials. As of the date of these financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates, assumptions and judgments or revise the carrying value of its assets or liabilities. Actual results could differ from these estimates, and any such differences may be material to the Company’s consolidated financial statements.

8


 

3. Fair Value Measurements

The following table presents information about the Company’s financial assets measured at fair value on a recurring basis and indicates the level of the fair value hierarchy utilized to determine such fair values as of June 30, 2022 and December 31, 2021:

Description

 

Financial Assets

 

 

Quoted
Prices in
Active
Markets
for Identical
Assets
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Other
Observable
Inputs
(Level 3)

 

 

 

(in thousands)

 

As of June 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 Assets

 

 

 

 

 

 

 

 

 

 

 

 

 Cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 Money market funds

 

$

218,740

 

 

$

218,740

 

 

$

 

 

$

 

 Marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 U.S. Treasury notes

 

 

6,255

 

 

 

6,255

 

 

 

 

 

 

 

 Total financial assets

 

$

224,995

 

 

$

224,995

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 Assets

 

 

 

 

 

 

 

 

 

 

 

 

 Cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 Money market funds

 

$

2,535

 

 

$

2,535

 

 

$

 

 

$