On March 10, 2022 Sierra Oncology, Inc. (NASDAQ: SRRA), a late-stage biopharmaceutical company dedicated to delivering targeted therapies for rare cancers, reported its financial and operating results for the fourth quarter and fiscal year ended December 31, 2021 (Press release, Sierra Oncology, MAR 10, 2022, View Source [SID1234609925]).
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"Last year was a great year for Sierra. We accelerated timelines in the midst of a global pandemic to over enroll the pivotal MOMENTUM clinical trial, achieving statistical significance in the primary and all pre-specified secondary endpoints. This year, we’ll be focused on our regulatory submission and the continued build out of our commercial team to prepare for the anticipated approval of momelotinib in early 2023," said Stephen Dilly, MBBS, PhD, President and Chief Executive Officer at Sierra Oncology. "Financially, we are in a strong position to support ongoing pre-commercialization activities for momelotinib, and continued development of our myelofibrosis franchise with a combination study of momelotinib and our novel BET inhibitor, SRA515."
The pivotal Phase 3 MOMENTUM clinical trial enrolled 195 symptomatic and anemic myelofibrosis patients previously treated with an approved JAK inhibitor. Data from this study, as well as previous data from the SIMPLIFY-1 and SIMPLIFY-2 Phase 3 studies, will serve as the foundation for the submission of a New Drug Application to the US Food & Drug Administration in the second quarter of 2022. If approved, the company anticipates momelotinib being commercially available early in the first half of 2023.
Key 2021 and Recent Business Highlights
Momelotinib achieved positive topline results in the pivotal Phase 3 MOMENTUM clinical trial for myelofibrosis, reporting a statistically significant benefit on symptoms, anemia and splenic size. The company plans to submit a New Drug Application with the US Food & Drug Administration in the second quarter of this year.
Sierra had cash and cash equivalents of $104.7 million as of December 31,2021 and has significantly strengthened its financial position during the first quarter of 2022 by raising a total of $155.3 million in gross proceeds from a public equity offering, and securing a debt facility with Oxford Finance, LLC for up to $125.0 million. Under the terms of the loan agreement, Sierra drew an initial $5.0 million at closing and has the ability to access up to an additional $120 million in a series of tranches (of which $50.0 million is at the discretion of the lender). Also, the company received proceeds of $30.5 million from the cash exercise of Series B warrants. The outstanding Series B warrants will expire on April 10, 2022, and if fully exercised would provide an additional $2.8 million in proceeds to the company. Additionally, in connection with a previously issued securities purchase agreement to Gilead, the related warrant was exercised, providing $9.6 million of proceeds to the company.
On January 19, 2022, the Journal of Hematology and Oncology published a review article on momelotinib, titled "Momelotinib: an emerging treatment for myelofibrosis patients with anemia." The article highlights the use of momelotinib for the potential treatment of myelofibrosis patients who are anemic based on published data from the SIMPLIFY studies as well as earlier Phase 2 studies. The full article is available for review here.
An exclusive global in-licensing agreement for SRA515 (formerly AZD5153), a potent and selective BRD4 BET inhibitor with a novel bivalent binding mode, was announced on August 5, 2021. The initiation of a Phase 2 study examining momelotinib in combination with SRA515 for the treatment of myelofibrosis is planned for the first half of 2022.
Year End 2021 Financial Results
Research and development expenses were $67.2 million for the year ended December 31, 2021, compared to $45.1 million for the year ended December 31, 2020. The increase was attributable to a $9.1 million increase in personnel-related and allocated overhead costs primarily due to headcount additions to support the continued development and preparation for the regulatory submission of momelotinib. Also attributing to the increase was an upfront cash payment of $8.0 million that was made to AstraZeneca for the exclusive global license of SRA515, and external costs for momelotinib, including a $4.4 million increase in third-party manufacturing costs primarily pertaining to the production of pre-approval inventory and a $2.2 million increase in clinical trial and development costs primarily pertaining to the MOMENTUM clinical trial and the related preparation for regulatory submission. These increases were partially offset by a $1.5 million non-cash charge incurred in 2020 to recognize the change in fair value of an obligation to issue securities to Gilead until the issuance of the securities in January 2020 and a $0.2 million decrease in costs for SRA737. Research and development expenses included non-cash stock-based compensation of $7.2 million and $4.3 million for the year ended December 31, 2021 and 2020, respectively.
General and administrative expenses were $27.4 million for the year ended December 31, 2021, compared to $20.1 million for the year ended December 31, 2020. The increase was due to a $4.9 million increase in personnel-related and allocated overhead costs primarily due to headcount additions for the expansion and the continued buildout of our infrastructure to support our potential commercialization efforts, including the establishment of key commercial functions such as marketing and market access. Also attributing to the increase in expense was an increase of $2.4 million in professional fees primarily relating to pre-commercial costs for momelotinib. General and administrative expenses included non-cash stock-based compensation of $5.7 million and $5.2 million for the year ended December 31, 2021 and 2020, respectively.
Total other expense (income), net was $0.1 million of total other expense, net for the year ended December 31, 2021, compared to $15.8 million of total other expense, net for the year ended December 31, 2020. The difference was primarily attributable to a non-cash charge of $16.2 million incurred during the year ended December 31, 2020, related to the change in fair value of warrant liabilities until the reclassification to equity in January 2020.
For the year ended December 31, 2021, Sierra incurred a Generally Accepted Accounting Principles (GAAP) net loss of $94.7 million compared to a GAAP net loss of $80.9 million for the year ended December 31, 2020. The GAAP net loss for the year ended December 31, 2021 includes an upfront cash payment of $8.0 million that was made to AstraZeneca for the exclusive global license of SRA515. The GAAP net loss for the year ended December 31, 2020, includes a non-cash charge of $16.2 million related to the change in fair value of warrant liabilities included in total other expense (income), 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 $81.8 million for the year ended December 31, 2021, compared with a non-GAAP adjusted net loss of $53.7 million for the year ended December 31, 2020. Non-GAAP adjusted net loss for the year ended December 31, 2021 and 2020 excludes expenses related to stock-based compensation. For the year ended December 31, 2020, non-GAAP net loss also excludes expenses related to the change in fair value of warrant liabilities and the change in fair value of the securities issuance obligation. See "Non-GAAP Financial Measures" and "Reconciliation of GAAP to Non-GAAP Financial Measures" below for a reconciliation of this GAAP measure to non-GAAP financial measure.
Cash and cash equivalents totaled $104.7 million as of December 31, 2021, compared to $104.1 million as of December 31, 2020.
As of December 31, 2021, there were 15,571,656 total shares of common stock outstanding and warrants to purchase 11,040,894 shares of common stock, with an exercise price equal to $13.20 per share. There were 4,937,189 shares issuable upon exercise of stock options and an additional warrant to purchase 1,839 shares.
Recent Financial Highlights
On January 31, 2022, the company completed an underwritten public offering of 4,074,075 shares of common stock and pre-funded warrants to purchase up to 925,925 shares of common stock. As part of the underwritten public offering, on February 3, 2022, the company issued an additional 750,000 shares of common stock representing the underwriters’ full exercise of their over-allotment option. The shares of common stock and the pre-funded warrants were offered by the company at a price to the public of $27.00 and $26.999 per share, respectively. The aggregate net proceeds received by the company from the offering were $145.6 million, net of underwriting discounts and commissions and estimated offering expenses of $9.7 million.
In the first quarter of 2022, the company has issued 18,937, 2,312,257 and 725,283 shares of common stock pertaining to the cash exercise of Series A warrants, Series B warrants, and the previously issued warrant related to a securities purchase agreement, respectively, providing proceeds to the company of $40.3 million. As of March 7, 2022, there were 23,665,100 shares of common stock outstanding and 925,925 pre-funded warrants to purchase shares of common stock. There were Series B warrants with an exercise price of $13.20 to purchase 212,477 shares of common stock which expire on April 10, 2022, and if exercised in full would provide $2.8 million of additional proceeds to the company. In addition, there were Series A warrants that contain a cash and/or cashless exercise provision to purchase 7,791,951 shares of common stock, with an exercise price equal to $13.20 per share. Additionally, there were 4,871,157 shares of common stock issuable upon exercise of stock options and a warrant.