Repare Therapeutics | Precision Oncology

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Accelerated filer

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10-Q

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 March 31, 2023

☐ 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.

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 May 1, 2023, there were 42,088,446 of the registrant’s common shares, no par value per share, outstanding.

Table of Contents


		Page
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS		1
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	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28
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	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosures	31
Item 5.	Other Information	31
Item 6.	Exhibits	32
Signatures

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 other 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 macroeconomic events, including the COVID-19 pandemic, rising inflation, the U.S. Federal Reserve raising interest rates, recent disruptions in access to bank deposits or lending commitments due to bank failures and the Russia-Ukraine war, on our operations, supply chains, general economic conditions, our ability to raise additional capital, and the continuity of our business, including our preclinical studies and clinical trials;

•

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 clinical trials 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 current or future product candidates that we develop;

•

our ability to receive any milestone or royalty payments under our collaboration and license agreements;

•

the effects of competition with respect to RP-6306, camonsertib, 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 and elsewhere in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2023.

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 macroeconomic events, including 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.

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 March 31,			As of December 31,
	2023			2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	121,461		$	159,521
Marketable securities		192,663			184,420
Research and development tax credits receivable		1,659			1,280
Collaboration revenue receivable		3,996			1,525
Other receivables		1,358			1,518
Prepaid expenses		4,389			5,715
Total current assets		325,526			353,979
Property and equipment, net		5,396			4,228
Operating lease right-of-use assets		4,976			5,371
Other assets		408			497
TOTAL ASSETS	$	336,306		$	364,075
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	3,620		$	461
Accrued expenses and other current liabilities		17,442			21,645
Operating lease liability, current portion		2,257			2,171
Deferred revenue, current portion		52,760			53,102
Income tax payable		4,856			1,240
Total current liabilities		80,935			78,619
Operating lease liability, net of current portion		2,780			3,257
Deferred revenue, net of current portion		1,347			2,682
TOTAL LIABILITIES		85,062			84,558
SHAREHOLDERS’ EQUITY
Preferred shares, no par value per share; unlimited shares authorized as of March 31, 2023 and December 31, 2022, respectively; 0 shares issued and outstanding as of March 31, 2023, and December 31, 2022, respectively		—			—
Common shares, no par value per share; unlimited shares authorized as of March 31, 2023 and December 31, 2022; 42,079,896 and 42,036,193 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively		482,677			482,032
Additional paid-in capital		43,056			37,226
Accumulated other comprehensive loss		(235	)		(428	)
Accumulated deficit		(274,254	)		(239,313	)
Total shareholders’ equity		251,244			279,517
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	336,306		$	364,075

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

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 March 31,
	2023			2022
Revenue:
Collaboration agreements	$	5,678		$	408
Operating expenses:
Research and development, net of tax credits		31,830			26,458
General and administrative		8,529			8,779
Total operating expenses		40,359			35,237
Loss from operations		(34,681	)		(34,829	)
Other income (expense), net
Realized and unrealized loss on foreign exchange		(56	)		(17	)
Interest income		3,427			129
Other expense		(15	)		(8	)
Total other income, net		3,356			104
Loss before income taxes		(31,325	)		(34,725	)
Income tax expense		(3,616	)		(32	)
Net loss	$	(34,941	)	$	(34,757	)
Other comprehensive gain:
Unrealized gain on available-for-sale marketable securities	$	193		$	—
Total other comprehensive gain		193			—
Comprehensive loss	$	(34,748	)	$	(34,757	)
Net loss per share attributable to common shareholders - basic and diluted	$	(0.83	)	$	(0.83	)
Weighted-average common shares outstanding - basic and diluted		42,040,674			41,861,613

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

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			Accumulated Other Comprehensive			Accumulated			Total Shareholders’
	Shares		Amount		Capital			Loss			Deficit			Equity
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


Balance, December 31, 2022		42,036,193	$	482,032	$	37,226		$	(428	)	$	(239,313	)	$	279,517
Exercise of stock options		2,000		7		(3	)		—			—			4
Share-based compensation expense		—		—		6,062			—			—			6,062
Issuance of common shares under the 2020 Employee Share Purchase Plan		41,703		638		(229	)		—			—			409
Other comprehensive gain		—		—		—			193			—			193
Net loss		—		—		—			—			(34,941	)		(34,941	)
Balance, March 31, 2023		42,079,896	$	482,677	$	43,056		$	(235	)	$	(274,254	)	$	251,244

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

Repare Therapeutics Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Amounts in thousands of U.S. dollars)


	Three Months Ended March 31,
	2023			2022
Cash Flows From Operating Activities:
Net loss for the period	$	(34,941	)	$	(34,757	)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation expense		6,062			4,755
Depreciation expense		441			516
Non-cash lease expense		541			544
Foreign exchange (gain) loss		66			(40	)
Net (accretion)/amortization of marketable securities		(1,839	)		21
Deferred tax		—			(1,315	)
Changes in operating assets and liabilities:
Prepaid expenses		1,330			2,399
Research and development tax credits receivable		(379	)		(399	)
Collaboration revenue receivable		(2,528	)		—
Other receivables		166			(5	)
Other non-current assets		89			—
Accounts payable		2,016			(772	)
Accrued expenses and other current liabilities		(4,203	)		(1,487	)
Operating lease liability, current portion		35			153
Income taxes payable		3,616			1,347
Operating lease liability, net of current portion		(581	)		(558	)
Deferred revenue		(1,677	)		(408	)
Net cash used in operating activities		(31,786	)		(30,006	)
Cash Flows From Investing Activities:
Purchases of property and equipment		(475	)		(487	)
Proceeds from maturities of marketable securities		92,500			2,650
Purchase of marketable securities		(98,711	)		(1,760	)
Net cash (used in) provided by investing activities		(6,686	)		403
Cash Flows From Financing Activities:
Proceeds from exercise of stock options		4			28
Proceeds from issuance of common stock under the 2020 Employee Share Purchase Plan		409			213
Net cash provided by financing activities		413			241
Effect of exchange rate fluctuations on cash held		(1	)		71
Net Decrease In Cash And Cash Equivalents		(38,060	)		(29,291	)
Cash and cash equivalents at beginning of period		159,521			334,427
Cash and cash equivalents at end of period	$	121,461		$	305,136

Supplemental Disclosure Of Cash Flow Information:
Property and equipment purchases incurred but not yet paid	$	1,134		$	1,541
Right-of-use asset obtained in exchange for new operating lease liability	$	146		$	56

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

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, 2022, 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 March 31, 2023, the consolidated results of its operations for the three months ended March 31, 2023 and 2022, its statements of shareholders’ equity for the three months ended March 31, 2023 and 2022 and its consolidated cash flows for the three months ended March 31, 2023 and 2022.

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, 2022 included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2023 (the “Annual Report”). The condensed consolidated balance sheet data as of December 31, 2022 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 months ended March 31, 2023 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, 2022 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, 2022 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

The Company qualifies as a “smaller reporting company” under the Exchange Act as of March 31, 2023 because the market value of its common shares held by non-affiliates was less than $560 million as of June 30, 2022 and its revenue for the year ended December 31, 2021 was less than $100 million. As a smaller reporting company, the Company may rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. For so long as the Company remains a smaller reporting company, it is permitted and the Company intends 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

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. 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 differ from those estimates. Changes in estimates are recorded in the period in which they become known.

3. Cash and Cash Equivalents and Marketable Securities

As of March 31, 2023 and December 31, 2022, cash and cash equivalents and marketable securities were comprised of the following:


	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(in thousands)
As of March 31, 2023
Cash and cash equivalents:
Cash	$	84,013	$	—	$	—		$	84,013
Money market funds		33,362		—		—			33,362
Commercial paper		4,086		—		—			4,086
Total cash and cash equivalents:	$	121,461	$	—	$	—		$	121,461
Marketable securities:
U.S. Treasury and government-sponsored enterprises	$	131,393	$	21	$	(192	)	$	131,222
Commercial paper		61,506		—		(65	)		61,441
Total marketable securities	$	192,899	$	21	$	(257	)	$	192,663

As of December 31, 2022
Cash and cash equivalents:
Cash	$	116,526	$	—	$	—		$	116,526
Money market funds		42,995		—		—			42,995
Total cash and cash equivalents:	$	159,521	$	—	$	—		$	159,521
Marketable securities:
U.S. Treasury and government-sponsored enterprises	$	184,848	$	5	$	(433	)	$	184,420
Total marketable securities	$	184,848	$	5	$	(433	)	$	184,420

Interest receivable was $0.2 million and $0.4 million as of March 31, 2023 and December 31, 2022, respectively, and is included in other receivables.

The Company held available-for-sale marketable securities with an aggregate fair value of $118.2 million and $157.9 million that were in an unrealized loss position as of March 31, 2023 and December 31, 2022, respectively. These marketable securities have been in an unrealized loss position for less than twelve months. The unrealized losses as of March 31, 2023 and December 31, 2022, were not attributed to credit risk but were primarily associated with changes in interest rates and market liquidity. The Company does not intend to sell these securities and it is more likely than not that it will hold these investments for a period of time sufficient to recover the amortized cost. As a result, the Company did not record an allowance for credit losses or other impairment charges for its marketable securities for the three months ended March 31, 2023 and 2022.

The Company recognized $0.2 million and nil in net unrealized gain in other comprehensive loss in the three months ended March 31, 2023 and 2022.

The maturities of the Company’s marketable securities as of March 31, 2023 and December 31, 2022 are less than one year.

4. Fair Value Measurements

Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

•

Level 1 – Quoted prices in active markets for identical assets or liabilities.

•

Level 2 – Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

•

Level 3 – Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

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 March 31, 2023 and December 31, 2022:


Description	Financial Assets		Level 1		Level 2		Level 3
	(in thousands)
As of March 31, 2023
Assets
Investments included in cash and cash equivalents
Money market funds	$	33,362	$	33,362	$	—	$	—
Commercial paper		4,086		—