On November 5, 2020 Sierra Oncology, Inc. (SRRA), a late-stage biopharmaceutical company focused on the Phase 3 execution, registration and potential commercialization of momelotinib, a novel drug that may address serious unmet needs in myelofibrosis, reported its financial and operational results for the third quarter ended September 30, 2020 (Press release, Sierra Oncology, NOV 5, 2020, View Source [SID1234570111]).

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"We continue to make good progress in our pivotal MOMENTUM Phase 3 trial for momelotinib and anticipate completing target enrollment by approximately mid-2021 and reporting top-line data in H1 2022, subject to any unforeseen impact from COVID-19," said Dr. Stephen Dilly, President and CEO of Sierra Oncology. "In addition, we anticipate presenting new analyses from previously completed Phase 3 studies of momelotinib at the American Society of Hematology (ASH) (Free ASH Whitepaper) annual meeting in December 2020."

"We are also developing our internal capabilities to support potential future regulatory filings and commercialization of momelotinib in the U.S., with key hires made recently in Regulatory Affairs, Technical Operations, Legal, Pharmacovigilance, Commercial, Business Development and Medical Affairs," added Dr. Dilly. "We remain well capitalized to complete enrollment for the MOMENTUM trial, report top-line results and to prepare for filing and pre-commercialization."

Third Quarter 2020 Financial Results (all amounts reported in U.S. currency)
Research and development expenses were $10.4 million for the three months ended September 30, 2020 compared with $10.1 million for the three months ended September 30, 2019. The increase was primarily due to a $1.5 million increase in clinical trial costs for momelotinib and a $0.3 million increase in personnel-related costs pertaining to an increase in stock-based compensation. These increases were offset by a $1.5 million decrease in clinical trial, third-party manufacturing, and research and preclinical costs for SRA737. Research and development expenses included non-cash stock-based compensation of $1.2 million and $0.9 million for the three months ended September 30, 2020 and 2019, respectively.

Research and development expenses were $32.2 million for the nine months ended September 30, 2020, compared with $32.0 million for the nine months ended September 30, 2019. The increase was primarily due to a $7.6 million increase in clinical trial and development costs for momelotinib, and 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 during the first quarter of 2020. These increases were offset by a $6.6 million decrease in clinical trial, third-party manufacturing, research and preclinical costs for SRA737, a $1.8 million decrease in personnel-related and allocated overhead costs, and a $0.5 million decrease in third-party manufacturing costs for momelotinib. Research and development expenses included non-cash stock-based compensation of $2.7 million and $3.3 million for the nine months ended September 30, 2020 and 2019, respectively.

General and administrative expenses were $4.1 million for the three months ended September 30, 2020, compared to $3.2 million for the three months ended September 30, 2019. The increase was due to an increase in personnel-related and allocated overhead costs of $0.7 million, primarily relating to an increase in stock-based compensation, and an increase of $0.2 million in professional fees. General and administrative expenses included non-cash stock-based compensation of $0.9 million and $0.4 million for the three months ended September 30, 2020 and 2019, respectively.

General and administrative expenses were $14.9 million for the nine months ended September 30, 2020, compared to $10.0 million for the nine months ended September 30, 2019. The increase was due to a $3.8 million increase in personnel-related and allocated overhead costs, including a non-cash $2.2 million stock-based compensation charge pertaining to the resignation of an executive and $1.0 million of severance charges, and an increase of $1.1 million in professional fees primarily relating to pre-commercial planning costs for momelotinib. General and administrative expenses included non-cash stock-based compensation of $4.0 million and $1.5 million for the nine months ended September 30, 2020 and 2019, respectively.

Other income (expense), net was $22,000 of other expense, net for the three months ended September 30, 2020, compared to $0.3 million of other income, net for the three months ended September 30, 2019. The difference was primarily attributable to a decrease in interest income due to lower interest rates. Other income (expense), net was $15.7 million of other expense, net for the nine months ended September 30, 2020, compared to $1.0 million of other income, net for the nine months ended September 30, 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 three months ended September 30, 2020, Sierra incurred a Generally Accepted Accounting Principles (GAAP) net loss of $14.5 million compared to a GAAP net loss of $12.9 million for the three months ended September 30, 2019. For the nine months ended September 30, 2020, Sierra incurred a GAAP net loss of $62.9 million compared to a GAAP net loss of $40.8 million for the nine months ended September 30, 2019. The GAAP net loss for the nine months ended September 30, 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 $12.4 million for the three months ended September 30, 2020, compared with a non-GAAP adjusted net loss of $11.6 million for the three months ended September 30, 2019. Non-GAAP adjusted net loss for the three months ended September 30, 2020 and 2019 excludes expenses related to stock-based compensation. For the nine months ended September 30, 2020, Sierra incurred a non-GAAP adjusted net loss of $38.5 million compared to a non-GAAP adjusted net loss of $36.1 million for the nine months ended September 30, 2019. Non-GAAP adjusted net loss for the nine months ended September 30, 2020 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. Non-GAAP adjusted net loss for the nine months ended September 30, 2019 excludes expenses related to 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 $109.0 million as of September 30, 2020, compared to $147.5 million as of December 31, 2019.

As of September 30, 2020, there were 10,495,732 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 4,246,167 shares issuable upon exercise of stock options and an additional warrant to purchase 1,839 shares.