On May 7, 2020 Sierra Oncology, Inc. (SRRA), a late-stage drug development company focused on the registration and commercialization of momelotinib, a JAK1, JAK2 & ACVR1 inhibitor with a potentially differentiated therapeutic profile for the treatment of myelofibrosis, reported its financial and operational results for the first quarter ended March 31, 2020 (Press release, Sierra Oncology, MAY 7, 2020, View Source [SID1234557307]).
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"We commenced Q1 2020 building off the launch in late 2019 of the MOMENTUM Phase 3 trial of momelotinib, which is intended to confirm the array of clinical benefits previously described for the drug candidate. Despite the challenges of COVID-19, which have impacted clinical study conduct for nearly all companies in our sector, we have nonetheless continued to make some progress operationalizing MOMENTUM at both the country and site level on a global basis through this crisis to date," said Dr. Nick Glover, President and CEO of Sierra Oncology. "Similar to other biotech and pharmaceutical companies, COVID-19 has had and will likely continue to have an effect on our clinical trial plans. We have experienced and may continue to experience some delays in planned site initiations, activations and overall enrollment, which effects will be difficult to predict until we have more visibility on the duration and impact of the crisis and the continuing institution of public health orders around the world."
"MOMENTUM is designed for myelofibrosis patients with pressing unmet medical needs and no approved therapeutic options. These patients are arguably best treated in a clinical trial. As such, MOMENTUM remains an important study for patients and their clinicians to potentially consider, even in the context of the COVID-19 pandemic, a view shared by many of our clinical investigators," said Dr. Barbara Klencke, Chief Development Officer, Sierra Oncology. "As an inhibitor of JAK1, JAK2 and ACVR1, momelotinib has been shown to substantially reduce transfusion burden and increase transfusion independence in patients with myelofibrosis, an important consideration at this time when the need for transfusions could place added burden on patients, caregivers, the healthcare system, and the blood supply, which further reinforces the potential benefits of enrolling in the MOMENTUM study. Publications further highlighting durability, safety and efficacy data for momelotinib remain planned throughout 2020 to further strengthen awareness of these potential benefits."
First Quarter 2020 Financial Results (all amounts reported in U.S. currency)
Research and development expenses were $11.6 million for the first quarter of 2020, compared to $10.1 million for the first quarter of 2019. The increase was primarily due to costs related to momelotinib, including a $3.7 million increase in clinical trial and development costs, a non-cash charge of $1.5 million pertaining to the change in fair value of an obligation to issue common stock and a warrant to Gilead Sciences, Inc. (Gilead), which were issued on January 31, 2020, and a $0.3 million increase in third-party manufacturing costs. These increases were partially offset by a decrease in SRA737 costs, including $3.1 million in clinical trial, third-party manufacturing and research and preclinical costs, and a $0.9 million decrease in personnel-related and allocated overhead costs. Research and development expenses included non-cash stock-based compensation of $0.5 million and $1.2 million for the three months ended March 31, 2020 and 2019, respectively.
General and administrative expenses were $4.5 million for the three months ended March 31, 2020 compared to $3.4 million for the three months ended March 31, 2019. The increase was due to a $0.8 million increase in professional fees, primarily related to pre-commercial planning costs for momelotinib, and a $0.4 million charge related to severance costs. General and administrative expenses included non-cash stock-based compensation of $0.4 million and $0.5 million for the three months ended March 31, 2020 and 2019, respectively.
Other income (expense), net was $15.7 million of other expense, net for the first quarter of 2020, compared to $0.3 million of other income, net for the first quarter of 2019. The difference was primarily attributable to a non-cash charge of $16.2 million related to the change in fair value of warrant liabilities which were reclassified to equity in January 2020.
For the quarter ended March 31, 2020, Sierra incurred a GAAP net loss of $31.9 million compared to a GAAP net loss of $13.0 million for the quarter ended March 31, 2019. The GAAP net loss for the quarter ended March 31, 2020 includes a non-cash charge of $16.2 million related to the change in fair value of warrant liabilities included in other income (expense), net and a $1.5 million non-cash charge pertaining to the obligation to issue securities to Gilead included in research and development expenses as mentioned above.
Non-GAAP adjusted net loss was $13.3 million for the quarter ended March 31, 2020, compared to a non-GAAP adjusted net loss of $11.3 million for the quarter ended March 31, 2019. Non-GAAP adjusted net loss excludes expenses related to the change in fair value of warrant liabilities, the change in fair value of the securities issuance obligation, and stock-based compensation. See "Non-GAAP Financial Measures" and "Reconciliation of GAAP to Non-GAAP Financial Measures" below for a reconciliation of this GAAP and non-GAAP financial measure.
Cash and cash equivalents totaled $133.5 million as of March 31, 2020, compared to $147.5 million as of December 31, 2019.
Sierra anticipates its current resources will be sufficient to execute on its development strategy for momelotinib into the second half of 2022, subject to the potential impact of COVID-19. In addition, the Series B warrants issued in the underwritten public offering in November 2019 may only be exercised by paying the exercise price in cash and will expire on the 75th day anniversary following the announcement of top-line data from the MOMENTUM Phase 3 trial. If these Series B warrants are fully exercised, the company will receive approximately $34.0 million in proceeds.
In January 2020, all of the Series A convertible voting preferred stock converted into shares of common stock and Sierra fulfilled the securities issuance obligation to Gilead, issuing 725,283 shares of common stock and a warrant to purchase an equivalent amount of common stock. As of March 31, 2020, there were 10,395,732 total shares of common stock outstanding and warrants to purchase 11,102,251 shares of common stock, with an exercise price equal to $13.20 per share. There were 1,738,827 shares issuable upon exercise of stock options and an additional warrant to purchase 1,839 shares.