Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with our audited consolidated financial statements and related notes appearing elsewhere in this Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Annual Report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
We are a clinical-stage precision oncology company enabled by our proprietary synthetic lethality approach to the discovery and development of novel therapeutics. Synthetic lethality, or SL, represents a clinically validated approach to drug development. We use our proprietary, genome-wide, CRISPR-enabled SNIPRx platform to systematically discover and develop highly targeted cancer therapies that preferentially treat cancers due to mechanisms of genomic instability, including DNA damage repair. SL arises when a deficiency in either of two genes is tolerated in cells, but simultaneous deficiencies in both genes cause cell death. Cancer cells that contain a mutation in one gene of a SL pair are susceptible to therapeutic intervention targeting the other gene pair.
Strategic Re-Prioritizatio n
In January 2025, we announced a re-alignment of resources and a re-prioritization of our clinical portfolio to focus on the continued advancement of our Phase 1 clinical programs, RP-3467 and RP-1664. We also announced our intention to seek partnering opportunities across our portfolio, including for lunresertib and camonsertib, prior to any start of pivotal development. Effective February 24, 2025, we reduced our workforce by approximately 75%, with our remaining employees primarily focused on the continued advancement of our Phase 1 clinical programs, RP-3467 and RP-1664.
Liquidity Overview
Since our inception in September 2016, we have focused primarily on raising capital, organizing and staffing our company, conducting discovery and research activities, identifying potential SL gene pairs, establishing and protecting our intellectual property portfolio including for our proprietary SNIPRx platform, developing and progressing our product candidates through preclinical studies and preparing for clinical trials and establishing arrangements with third parties for the manufacture of initial quantities of our product candidates and component materials.
As of December 31, 2024, we had cash and cash equivalents and marketable securities on hand of $152.8 million. We believe that our cash, cash equivalents, and marketable securities will be sufficient to fund our anticipated operating and capital expenditure requirements into late-2027, after taking into account the realignment of resources and reprioritization of our clinical portfolio announced in January 2025 and our reduction in workforce announced in February 2025. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our capital resources sooner than we expect.
Since inception, we have incurred significant operating losses. Our net losses were $84.7 million, and $93.8 million for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, we had an accumulated deficit of $417.8 million.
We expect to continue to incur significant expenses and operating losses for the foreseeable future, as we advance our product candidates through preclinical and clinical development and seek regulatory approvals, manufacture drug product and drug supply, as well as maintain and expand our intellectual property portfolio. Our net losses are also expected to be impacted as we pay for accounting, audit, legal, regulatory and consulting services, and pay costs associated with maintaining compliance with Nasdaq listing rules and the SEC requirements, directors and officers, or D&O, insurance, investor and public relations activities and other expenses associated with operating as a public company. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on
the timing of our preclinical studies, our clinical trials, our expenditures on other research and development activities, our revenue and expenses recognized from collaboration and license agreements, as well as restructuring initiatives we undertake.
We do not have any products approved for sale. We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for our product candidates, if ever. As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity offerings and debt financings or other sources, such as potential collaboration agreements, strategic alliances and licensing arrangements. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on acceptable terms, or at all. Our failure to raise capital or enter into such agreements as, and when, needed, could have a negative effect on our business, results of operations and financial condition.
Macroeconomic Considerations and Other Global Uncertainties
Unfavorable conditions in the economy in the United States, Canada and abroad may negatively affect the growth of our business and our results of operations. For example, macroeconomic events, including health pandemics, changes in inflation and interest rates as well as foreign currency exchange rates, global trade restrictions and the potential imposition of tariffs, natural disasters, supply chain disruptions and the Russia-Ukraine and Middle-East conflicts, have led to economic uncertainty globally and could impact our overall business operations. The effect of macroeconomic conditions may not be fully reflected in our results of operations until future periods. If, however, economic uncertainty increases or the global economy worsens, our business, financial condition and results of operations may be harmed. For further discussion of the potential impacts of macroeconomic events on our business, financial condition, and operating results, see the section titled “Risk Factors.”
In addition, because some of our manufacturers and suppliers are located in China, we are exposed to the possibility of product supply disruption and increased costs in the event of changes in the policies, laws, rules and regulations of the United States or Chinese governments, as well as political unrest or unstable economic conditions in China. The U.S. government has indicated its intent to adopt a new approach to trade policy and in some cases to renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade agreements. For example, on February 1, 2025, President Donald Trump signed executive orders imposing a 25% tariff on certain imports from Mexico and Canada, and a 10% tariff on certain imports from China, which were to take effect on February 4, 2025. A 30-day pause was granted to Canada and Mexico. However, these newly proposed and imposed tariffs have resulted in threatened and actual retaliatory tariffs against U.S. goods. Our components may in the future be subject to these and additional tariffs, which could increase our manufacturing costs and could make our products, if successfully developed and approved, less competitive than those of our competitors whose inputs are not subject to these tariffs. We may otherwise experience supply disruptions or delays, and although we carefully manage our supply and lead-times, our suppliers may not continue to provide us with clinical supply in our required quantities, to our required specifications and quality levels or at attractive prices. In addition, certain Chinese biotechnology companies and CMOs may become subject to trade restrictions, sanctions, other regulatory requirements, or proposed legislation by the U.S. government, which could restrict or even prohibit our ability to work with such entities, thereby potentially disrupting the supply of material to us. Such disruption could have adverse effects on the development of our product candidates and our business operations.
Components of Results of Operations
Revenue
To date, we have not recognized any revenue from product sales, and we do not expect to generate any revenue from the sale of products in the foreseeable future. If our development efforts for our product candidates are successful and result in regulatory approval, or license agreements with third parties, we may generate revenue in the future from product sales. However, there can be no assurance as to when we will generate such revenue, if at all.
The following table presents revenue from collaboration agreements:
December 31,
(in thousands)
Roche Collaboration and License Agreement
Bristol-Myers Squibb Collaboration and License Agreement
Ono Collaboration Agreement
Total revenue
Collaboration and License Agreement with Hoffmann-La Roche Inc. and F. Hoffmann-La Roche Ltd.
On June 1, 2022, we entered into a collaboration and license agreement (the Roche Agreement) with Hoffmann-La Roche Inc. and F. Hoffmann-La Roche Ltd (collectively, Roche) regarding the development and commercialization of our product candidate camonsertib (also known as RP-3500) and specified other ATR (Ataxia-Telangiectasia and Rad3-related protein kinase) inhibitors, which we refer to as the Licensed Products.
Under the Roche Agreement, we granted Roche a worldwide, perpetual, exclusive, sublicensable license to develop, manufacture, and commercialize the Licensed Products. Roche assumed all subsequent development of camonsertib with the potential to expand development into additional tumors and multiple combination studies. We agreed to complete specified ongoing clinical trials in accordance with the development plan in the Roche Agreement, as well as ongoing investigator sponsored trials, or together, the Continuing Trials, at our expense. We also retained the right to conduct specified clinical trials of camonsertib in combination with our PKMYT1 compound (also known as lunresertib).
We determined that the transaction price at the onset of the Roche Agreement was $134.6 million, being (i) the total non-refundable upfront payment received of $125.0 million, (ii) the additional $4.0 million payment received, negotiated with Roche for revisions to the clinical development plan under the Roche Agreement as agreed at the time of the effective date of the Roche Agreement, and (iii) the $5.6 million received for the transfer of clinical trial materials.
In February 2023, we received an additional payment of $4.0 million negotiated with Roche for additional revisions to the clinical development plan. In March 2024, we received a further payment of $4.0 million for revisions to the clinical development plan under the Roche Agreement, of which $2.1 million was recorded as collaboration revenue receivable at December 31, 2023. The transaction price was updated for the additional consideration received, as well as other adjustments of $0.5 million pursuant to the termination of the agreement.
Performance obligation
Transaction price
(in thousands)
Combined licenses
Completion of Continuing Trials
Transfer of clinical trial materials
Total transaction price
Deferred revenue pertaining to the Roche Agreement
Completion of Continuing Trials
(in thousands)
Balance as of December 31, 2023
Increase in collaboration revenue receivable
Recognition as revenue, as the result of performance obligations satisfied
Balance as of December 31, 2024
We recognized $50.9 million for the year ended December 31, 2024 as revenue associated with the Roche Agreement in relation to (i) the recognition of revenue from a $40.0 million milestone payment from Roche in February 2024 upon dosing of the first patient with camonsertib in Roche's Phase 2 TAPISTRY trial, as well as (ii) the recognition of all remaining deferred revenue for research and development services performed towards the
completion of the Continuing Trials during the period. As of December 31, 2024, there was nil deferred revenue related to the Roche Agreement.
Over the course of the Roche camonsertib collaboration, we received a cumulative total of $182.6 million, including the upfront payment, the milestone payment, as well as additional reimbursements from Roche. On February 7, 2024, we received written notice from Roche of their election to terminate the Roche collaboration agreement following a review of Roche's pipeline and evolving external factors. The termination became effective on May 7, 2024, at which time we regained global development and commercialization rights for camonsertib from Roche. Following May 7, 2024, there is no other material relationship between us and Roche.
We recognized $14.5 million for the year ended December 31, 2023 in recognition of research and development services performed towards the completion of the Continuing Trials under the Roche Agreement during the year. As of December 31, 2023, there was $9.4 million of deferred revenue related to the Roche Agreement, of which $7.7 million was classified as current and $1.7 million was classified as non-current in the consolidated balance sheet based on the period the services to complete the Continuing Trials were expected to be performed.
Collaboration and License Agreement with Bristol-Myers Squibb Company
In May 2020, we entered into a collaboration and license agreement, or the BMS Agreement, with the Bristol-Myers Squibb Company, or Bristol-Myers Squibb, pursuant to which we and Bristol-Myers Squibb agreed to collaborate in the research and development of potential new product candidates for the treatment of cancer. We provided Bristol-Myers Squibb access to a selected number of our existing screening campaigns and novel campaigns. We were responsible for carrying out early-stage research activities directed to identifying potential targets for potential licensing by Bristol-Myers Squibb. The collaboration consisted of programs directed to both druggable targets and to targets commonly considered undruggable to traditional small molecule approaches. In the event that Bristol-Myers Squibb elected to obtain an exclusive license for the subsequent development, manufacturing and commercialization of a program, Bristol-Myers Squibb will then be solely responsible for all such worldwide activities.
Although the collaboration term expired in November 2023, the BMS Agreement will not expire until, on a licensed product-by-licensed product and country-by-country basis, the expiration of the applicable royalty term and in its entirety upon expiration of the last royalty term. Either party may terminate earlier upon an uncured material breach of the agreement by the other party, or the insolvency of the other party. Additionally, Bristol-Myers Squibb may terminate the BMS Agreement for any or no reason on a program-by-program basis upon specified written notice. We are eligible to receive up to $301.0 million in total milestones on a program-by-program basis, subject upon the achievement of certain specified research, development, regulatory and commercial milestones. We are further entitled to a tiered percentage royalty on annual net sales ranging from high-single digits to low-double digits, subject to certain specified reductions.
As part of the BMS Agreement, Bristol-Myers Squibb paid us an initial upfront fee of $50.0 million and made an equity investment of $15.0 million in our company.
The $50.0 million upfront payment was recorded as deferred revenue on our consolidated balance sheet and was partially recognized at the point in time when option licenses were exercised by Bristol-Myers Squibb, with the remainder being recognized on a proportional performance basis over the period of service for research services.
Performance obligation
Transaction price
(in thousands)
Research activities
Options to license druggable targets
Options to license undruggable targets
Total transaction price
Deferred revenue pertaining to the BMS Agreement
Research activities
Options to license druggable targets
Options to license undruggable targets
Total
(in thousands)
Balance as of December 31, 2023
Increase in collaboration revenue receivable
Recognition as revenue, as the result of performance
obligations satisfied
Balance as of December 31, 2024
We recognized nil as revenue for the year ended December 31, 2024 and $2.4 million for the year ended December 31, 2023, in recognition of deferred revenue for research activities performed under the BMS Agreement.
We recognized nil as revenue for the year ended December 31, 2024 and $13.7 million for the year ended December 31, 2023, related to druggable targets.
We completed the discovery portion of the BMS Agreement in November 2023. With the completion of our performance obligations under the BMS Agreement in the fourth quarter of 2023, we recognized $10.0 million as revenue for the year ended December 31, 2023 related to options to license undruggable targets as these options expired upon completion of the discovery portion of the BMS Agreement. As of December 31, 2023, Bristol-Myers Squibb retained its right to exercise one option to an undruggable target.
In March 2024, Bristol-Myers Squibb exercised its one remaining option for an undruggable target. As a result, we recognized $2.6 million as revenue related to undruggable targets, including the option fee payment of $0.1 million, for the year ended December 31, 2024.
As of December 31, 2023, there was $2.5 million of deferred revenue related to the BMS Agreement, which was classified as current on the consolidated balance sheet based on the period the services are expected to be performed and the expected timing of potential option exercises. As of December 31, 2024, there was no deferred revenue related to the BMS Agreement.
Over the course of our collaboration, Bristol-Myers Squibb has exercised its options for a combined total of five druggable targets and one undruggable target.
Collaboration Agreement with Ono Pharmaceutical Company Ltd.
In January 2019, we entered into a research services, license and collaboration agreement (the Ono Agreement) with Ono Pharmaceutical Company Ltd. (Ono), pursuant to which we and Ono agreed to collaborate in the research of potential product candidates targeting Polθ and the development of our small molecule Polθ ATPase inhibitor program. Pursuant to the terms of the agreement, we received initial upfront payments of approximately $8.1 million. These upfront payments were recorded as deferred revenue on our consolidated balance sheet as per our revenue recognition accounting policy and were to be recognized as revenue at the point in time when a product candidate was licensed to Ono pursuant to the terms of the agreement.
In October 2021 and December 2022, we achieved specified research triggers amounting to ¥100 million ($0.9 million) and ¥200 million ($1.5 million), respectively, as research service payments provided for in the Ono Agreement. These amounts were added to the transaction price as the consideration was no longer constrained.
In June 2023, we and Ono determined not to further extend the term of the Ono Agreement. As a result, no product candidate would be licensed to Ono pursuant to the terms of the Ono Agreement. We recognized revenue of $10.5 million for the year ended December 31, 2023 with regards to the performance obligation under the Ono Agreement. In July 2023, Ono provided us with a formal notice to terminate the Ono Agreement without cause as defined in the Ono Agreement. As a result of this termination, all rights to the Polθ program have reverted back to us.
Operating Expenses
Debiopharm Collaborative Arrangement
In January 2024, we entered into a clinical study and collaboration agreement, or the Debio Collaboration Agreement, with Debiopharm International S.A., or Debiopharm, a privately-owned, Swiss-based biopharmaceutical company, with the aim to explore the synergy between our compound, lunresertib, and Debiopharm’s compound, Debio 0123, a WEE1 inhibitor. We are collaborating with Debiopharm on the development of a combination therapy, with us sponsoring the global study, and will share all costs equally. Both parties are each supplying their respective drugs and retain all commercial rights to their respective compounds, including as monotherapy or as combination therapies. The activities associated with the Debio Collaboration Agreement are coordinated by a joint steering committee, which is comprised of an equal number of representatives from both parties. Based on the terms of the Debio Collaboration Agreement, we concluded that the Debio Collaboration Agreement meets the requirements of a collaboration within the guidance of ASC 808, “Collaborative Arrangements”, as both parties are active participants in the combination trial and are exposed to significant risks and rewards depending on the success of the combination trial. Accordingly, the net costs associated with the co-development are expensed as incurred and recognized within research and development expenses in our consolidated statement of operations and comprehensive loss. During the year ended December 31, 2024, we recognized $3.2 million in net research and development costs with regards to the Debiopharm portion of the 50/50 cost sharing terms in the Debio Collaboration Agreement.
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for our research activities, including our drug discovery efforts and the development of our product candidates, partially offset by fully refundable Canadian research and development tax credits. We expense research and development costs as incurred, which include:
external research and development expenses incurred under agreements with contract research organizations, or CROs, as well as investigative sites and consultants that conduct our clinical trials, preclinical studies and other scientific development services;
employee-related expenses, including salaries, bonuses, benefits, share-based compensation, and other related costs for those employees involved in research and development efforts;
costs related to manufacturing material for our preclinical studies and clinical trials, including fees paid to contract manufacturing organizations, or CMOs;
laboratory supplies and research materials;
upfront, milestone and maintenance fees incurred under license, acquisition and other third-party agreements;
costs related to compliance with regulatory requirements; and
facilities, depreciation, scientific advisory board and other allocated expenses, which include direct and allocated expenses for rent, maintenance of facilities and equipment, insurance, equipment and software.
Costs for certain activities are recognized based on an evaluation of the progress to completion of specific tasks using data such as information provided to us by our vendors and analyzing the progress of our studies or other services performed. Significant judgment and estimates are made in determining the accrued expense or prepaid balances at the end of any reporting period.
We characterize research and development costs incurred prior to the identification of a product candidate as discovery costs. We characterize costs incurred once a product candidate has been identified as development costs.
Our direct external research and development expenses consist primarily of fees paid to outside consultants, CROs, CMOs and research laboratories in connection with our preclinical development, process development, manufacturing and clinical development activities. Our direct external research and development expenses also
include fees incurred under license, acquisition, and option agreements. We track these external research and development costs on a program-by-program basis once we have identified a product candidate.
We do not allocate employee costs, costs associated with our discovery efforts, laboratory supplies, and facilities, including depreciation or other indirect costs, to specific programs because these costs are deployed across multiple programs and, as such, are not separately classified. We use internal resources primarily to conduct our research and discovery activities as well as for managing our preclinical development, process development, manufacturing, and clinical development activities.
The following table summarizes our research and development costs:
Year Ended
December 31,
(in thousands)
Discovery costs
Direct external costs
Laboratory supplies and research materials
Personnel related costs
Facilities related costs
Other costs
Development costs
Direct external costs
Camonsertib program
Lunresertib program
RP-1664 program
RP-3467 and Polθ program
Personnel related costs
Facilities related costs
Other costs
Debiopharm development cost reimbursement
R&D tax credits
Total research and development costs
The successful development of our product candidates is highly uncertain. We expect our research and development expenses to decrease in the short term as a result of the cost savings initiatives we implemented in connection with strategic reprioritization activities implemented in August 2024 and January 2025. We cannot determine with certainty the timing of initiation, the duration, or the completion costs of current or future preclinical studies and clinical trials of our product candidates due to the inherently unpredictable nature of preclinical and clinical development. Clinical and preclinical development timelines, the probability of success and development costs can differ materially from expectations. We anticipate that we will make determinations as to which product candidates to pursue and how much funding to direct to each product candidate on an ongoing basis in response to the results of ongoing and future preclinical studies and clinical trials, regulatory developments, and our ongoing assessments as to each product candidate’s commercial potential. We will need to raise substantial additional capital in the future. Our clinical development costs are expected to increase significantly as we commence clinical trials. We anticipate that our expenses will increase substantially, particularly due to the numerous risks and uncertainties associated with developing product candidates, including the uncertainty of:
the scope, rate of progress, and expenses of our ongoing research activities as well as any preclinical studies, clinical trials and other research and development activities;
establishing an appropriate safety profile;
successful enrollment in and completion of clinical trials;
whether our product candidates show safety and efficacy in our clinical trials;
receipt of marketing approvals from applicable regulatory authorities;
establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers;
obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our product candidates;
commercializing product candidates, if and when approved, whether alone or in collaboration with others; and
continued acceptable safety profile of products following any regulatory approval.
Any changes in the outcome of any of these variables with respect to the development of our product candidates in preclinical and clinical development could mean a significant change in the costs and timing associated with the development of these product candidates. We may never succeed in achieving regulatory approval for any of our product candidates. We may obtain unexpected results from our clinical trials. We may elect to discontinue, delay or modify clinical trials of some product candidates or focus on other product candidates. For example, if the U.S. Food and Drug Administration, or FDA, the European Medicines Agency, or EMA, or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect or if we experience significant delays in enrollment in any of our ongoing and planned clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development of that product candidate.
General and Administrative Expenses
General and administrative expense consists primarily of employee related costs, including salaries, bonuses, benefits, share-based compensation and other related costs, as well as expenses for outside professional services, including legal, accounting and audit services and other consulting fees, rent expense, directors and officers insurance expenses, investor and public relations expenses and other general administrative expenses.
We anticipate that we will continue to incur significant accounting, audit, legal, regulatory, compliance and directors’ and officers’ insurance costs as well as investor and public relations expenses. We also anticipate that our general and administrative expenses may increase in the future as we explore partnering alternatives for our portfolio, including potential legal, accounting and advisory expenses and other related charges.
Restructuring Expenses
In August 2024, we announced a strategic reprioritization of our research and development activities to focus our efforts on the advancement of our portfolio of clinical-stage oncology programs. As part of this strategic refocus, we reduced our overall workforce by approximately 25%, with a majority of the headcount reductions from our preclinical group. For the year ended December 31, 2024, we incurred approximately $1.4 million in costs as part of this strategic refocus, comprised primarily of severance and termination benefits.
In January 2025, we announced a further realignment of resources and a reprioritization of our clinical portfolio to focus on the continued advancement of our Phase 1 clinical programs, RP-3467 and RP-1664. Effective February 24, 2025, we also reduced our workforce by approximately 75%. We estimate that we will incur approximately $8.7 million for retention, severance and other employee termination-related costs through the fourth quarter of 2025.
Other Income (Expense), Net
Other income (expense), net consists primarily of realized and unrealized gains and losses on foreign exchange, interest income earned on cash and cash equivalents and marketable securities, and other expenses such as interest and bank charges.
Realized and unrealized gains and losses on foreign exchange consist of realized and unrealized gains and losses from holding cash and foreign currency denominated other receivables, accounts payable, accrued expenses and other current liabilities as well as operating lease liabilities.
Results of Operations
Comparison of the Years Ended December 31, 2024 and 2023
The following table summarizes our results of operations for the years ended December 31, 2024 and 2023:
Year Ended
December 31,
Change
(in thousands)
Revenue:
Collaboration agreements
Operating expenses:
Research and development, net of tax credits
General and administrative
Restructuring
Total operating expenses
Loss from operations
Other income (expense), net:
Realized and unrealized loss on foreign exchange
Interest income
Other expense, net
Total other income, net
Loss before income taxes
Income tax (expense) benefit
Net loss
Revenue
Revenue was $53.5 million for the year ended December 31, 2024, compared to $51.1 million for year ended December 31, 2023. The increase of $2.3 million was due to:
a $36.3 million increase in revenue recognized under the Roche Agreement as a result of the $40.0 million milestone achievement in the first quarter of 2024 and higher deferred revenue recognized for the completion of the Continuing Trials. The Roche Agreement was terminated in May 2024;
a $23.5 million decrease in revenue recognized under the BMS Agreement which expired in November 2023; and
a $10.5 million decrease in revenue recognized under the Ono Agreement which expired in June 2023.
Research and Development Expenses, Net of Tax Credits
Research and development expenses were $115.9 million for the year ended December 31, 2024, compared to $133.6 million for the year ended December 31, 2023. The decrease of $17.7 million in research and development expenses was primarily due to:
a $9.1 million decrease in direct external costs of the camonsertib program due to end of Phase 1/2 TRESR and ATTACC;
a $3.2 million increase in Debiopharm development cost reimbursement;
a $2.4 million decrease in other direct external costs related to discovery programs;
a $1.6 million decrease in the direct external costs of the RP-3467 & Polθ program;
a $0.8 million decrease in direct external costs of the lunresertib program;
a $0.6 million increase in the RP-1664 program as a result of the LIONS clinical trial underway; and
a $0.6 million decrease in personnel costs; and
a $0.6 million decrease in other research and material expenses including IT related costs and tax credits.
General and Administrative Expenses
General and administrative expenses were $29.7 million for the year ended December 31, 2024, compared to $33.8 million for the year ended December 31, 2023. The decrease of $4.1 million in general and administrative expenses consisted of:
a $2.4 million decrease in personnel related costs, including a $2.1 million decrease in share-based compensation;
a $1.2 million decrease in our D&O insurance premium due to lower renewal premiums; and
a $0.5 million decrease in professional fees associated with lower renewal of legal and finance services.
Restructuring Expenses
Restructuring expenses was $1.4 million and nil for the years ended December 31, 2024 and 2023, respectively, as a result of costs incurred as part of our strategic refocus announced in August 2024, comprised primarily of severance and termination benefits.
Other Income (Expense), Net
Other income, net was $10.3 million for the year ended December 31, 2024, compared to $13.0 million for the year ended December 31, 2023. The decrease of $2.8 million in other income was primarily attributable to lower sums in cash and cash equivalents and marketable securities.
Income Tax (Expense) Benefit
Income tax provision of $1.4 million for the year ended December 31, 2024 primarily due to taxable income in our U.S. subsidiary and utilization of federal and state research and development tax credit carry forwards.
Income tax benefit was $9.4 million for the year ended December 31, 2023, primarily due to taxable income in our U.S. subsidiary and utilization of federal and state research and development tax credit carry forwards offset by a favorable adjustment related to IRC Section 174 guidance issued in September 2023 prior to filing U.S. income tax returns for the prior period.
The decrease of $10.8 million in the income tax benefit was primarily driven by a favorable adjustment in the prior period U.S income taxes related to IRC Section 174 guidance, offset by the utilization of federal and state research and development tax credit carry forwards.
Liquidity and Capital Resources
Since our inception, we have not recognized any revenue from product sales and have incurred operating losses and negative cash flows from our operations. We have not yet commercialized any product and we do not expect to generate revenue from sales of any products for several years, if at all. We have funded our operations to date with proceeds received from equity financings, including net proceeds of $232.0 million from our IPO in June 2020 and net proceeds of $94.3 million from a follow-on offering in November 2021. We have also received initial upfront and additional payments of approximately $243.1 million in the aggregate from our collaboration and license agreements.
In August 2022, we entered into a Common Shares Sale Agreement, or the 2022 Sales Agreement, with Cowen and Company, LLC pursuant to which we may sell up to $125.0 million in common shares. In November 2024, we entered into a Common Shares Sale Agreement, or the 2024 Sales Agreement, with TD Securities (USA) LLC to replace the 2022 Sales Agreement, pursuant to which we may sell up to $100.0 million in common shares. During the years ended December 31, 2024 and 2023, we did not issue or sell shares under the 2022 Sales Agreement or 2024 Sales Agreement.
In August 2024, we announced a strategic reprioritization of our research and development activities to focus our efforts on the advancement of our portfolio of clinical-stage oncology programs. As part of this strategic refocus, we reduced our overall workforce by approximately 25%, with a majority of the headcount reductions from our preclinical group. Furthermore, in January 2025, we announced a realignment of resources and a reprioritization of our clinical portfolio to focus on the continued advancement of our Phase 1 clinical programs, RP-3467 and RP-1664, and in February 2025 we reduced our workforce by 75%. We also announced our intention to seek partnering opportunities across our portfolio, including for lunresertib and camonsertib prior to the start of any pivotal development.
We expect to incur significant expenses and operating losses for the foreseeable future as we advance our product candidates through preclinical and clinical development, seek regulatory approval and pursue commercialization of any approved product candidates and we will continue to incur additional costs associated with operating as a public company, including with our transition from smaller reporting company status at the end of 2024. We expect that our research and development and general and administrative costs will increase in connection with our planned research and development activities.
Beginning in 2022, the Tax Cuts and Jobs Act of 2017 eliminated the option to deduct certain U.S.-based research and development expenditures in the current fiscal year and required taxpayers to amortize them over five years pursuant to Section 174 of the Internal Revenue Code of 1986, as amended, or IRC. This provision increased our 2023 and 2022 cash payments of income taxes significantly as compared to 2021 in compliance with IRC Section 174. In September 2023, new interim guidance was issued by the Department of Treasury and the Internal Revenue Service on IRC Section 174 that supports the deduction of such expenses. An income tax receivable in the amount of $11.6 million as of December 31, 2024 reflects the overpayment of tax installments by our U.S. subsidiary. Any changes to tax legislation may materially affect our cash flows. Changes in our tax provisions or an increase in our tax liabilities, whether due to changes in applicable laws and regulations or our interpretation or application thereof, could have a material adverse effect on our financial position, results of operations and/or cash flows.
As of December 31, 2024, our cash and cash equivalents and marketable securities on hand was $152.8 million. Taking into account the anticipated cost savings associated with the announced realignment of resources and a reprioritization of our portfolio, we believe that our cash, cash equivalents, and marketable securities will be sufficient
to fund our anticipated operating and capital expenditure requirements into late-2027. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our capital resources sooner than we expect.
Because of the numerous risks and uncertainties associated with research, development, and commercialization of our product candidates, we are unable to estimate the exact amount of our working capital requirements. Our future capital requirements will depend on many factors, including:
the initiation, timing, costs, progress and results of our product candidates, including our ongoing Phase 1 clinical trials of lunresertib;
the progress of preclinical development and possible clinical trials of our current earlier-stage programs;
the scope, progress, results and costs of our research programs and preclinical development of any additional product candidates that we may pursue;
the development requirements of other product candidates that we may pursue;
our headcount growth and associated costs as we expand our research and development and establish a commercial infrastructure;
the timing and amount of milestone and royalty payments that we are required to make or eligible to receive under our current or future collaboration agreements;
the outcome, timing and cost of meeting regulatory requirements established by the FDA, EMA and other regulatory authorities;
the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our product candidates for which we or our collaborators receive marketing approval;
the cost of expanding, maintaining and enforcing our intellectual property portfolio, including filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights;
the cost of defending potential intellectual property disputes, including patent infringement actions brought by third parties against us or any of our product candidates;
the effect of competing technological and market developments;
the cost and timing of completion of commercial-scale manufacturing activities;
the extent to which we partner our programs, acquire or in-license other product candidates and technologies or enter into additional strategic collaborations;
the revenue, if any, received from commercial sales of RP-3467, RP-1664, lunresertib, camonsertib and any future product candidates for which we or our collaborators receive marketing approval; and
the costs of operating as a public company.
Until such time, if ever, as we can generate substantial product revenues to support our cost structure, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations and other similar arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our shareholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common shareholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, or other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common shares. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.
Cash Flows
Comparison of the Years Ended December 31, 2024 and 2023
The following table summarizes our cash flows for each of the years presented:
Year ended
December 31,
CHANGE
(in thousands)
Net cash used in operating activities
Net cash provided by investing activities
Net cash provided by financing activities
Effect of exchange rate fluctuations on cash held
Net Decrease In Cash And Cash Equivalents
Operating Activities
Net cash used in operating activities was $76.4 million for the year ended December 31, 2024, reflecting a net loss of $84.7 million, a net decrease of $14.1 million in our net operating assets offset by a net change in non-cash charges of $22.3 million. The non-cash charges primarily consist of share-based compensation for option grants to employees, as well as depreciation expense and non-cash lease expense offset by the net accretion/amortization of marketable securities. The change in our net operating assets was primarily due to $12.0 million of deferred revenue being recognized with the satisfaction of performance obligations and by a net decrease of $2.1 million in accounts payable and accrued expenses, prepaid expenses, operating leases, other current liabilities and other current and non-current assets.
Net cash used in operating activities was $127.2 million for the year ended December 31, 2023, reflecting a net loss of $93.8 million, a net decrease of $55.2 million in our net operating assets offset by a net change in non-cash charges of $21.8 million. The non-cash charges primarily consist of share-based compensation for option grants to employees, as well as depreciation expense and non-cash lease expense offset by the net accretion/amortization of marketable securities. The change in our net operating assets was primarily due to $43.8 million of deferred revenue being recognized with the satisfaction of performance obligations and $14.3 million income tax recovery, offset by an increase of $4.3 million in account payable and accrued expenses and other current liabilities.
The $50.7 million decrease in cash used in operating activities for the year ended December 31, 2024 compared to December 31, 2023 is primarily due to the $40.0 million milestone payment received from Roche in the first quarter of 2024.
Investing Activities
Net cash provided by investing activities was $49.5 million for the year ended December 31, 2024 and resulted primarily from proceeds from maturities of marketable securities offset by purchases of marketable securities.
Net cash provided by investing activities was $78.0 million for the year ended December 31, 2023 and resulted primarily from proceeds from maturities of marketable securities offset by purchases of marketable securities.
Financing Activities
Net cash provided by financing activities was $0.5 million for the year ended December 31, 2024, consisting of net proceeds from the exercise of stock options and issuance of common shares under the ESPP.
Net cash provided by financing activities was $0.8 million for the year ended December 31, 2023, consisting of net proceeds from the exercise of stock options and issuance of common shares under the ESPP.
Material Cash Requirements
As of December 31, 2024, we anticipate the aggregate of our cash and cash equivalents and marketable securities will be sufficient to fund our contractual obligations, as well as cash requirements to support our ongoing operations and capital expenditures. Our contractual obligations as of December 31, 2024 primarily consist of:
Operating Leases
We have certain lease agreements for office and laboratory space in Montréal, Quebec, and office space in Cambridge, Massachusetts, under which we are obligated to make lease payments of $2.0 million as of December 31, 2024.
Purchase and Other Obligations
In the normal course of business, we enter into contracts with CROs and other third parties for preclinical studies and clinical trials, research and development supplies and other testing and manufacturing services. These contracts generally do not contain minimum purchase commitments and provide for termination 30 to 90 days’ prior written notice, and therefore are cancellable contracts. The amount and timing of such payments are not known as of December 31, 2024.
In the normal course of business, we enter into non-cancellable purchase obligations for services and subscriptions in support of our activities. As of December 31, 2024, future estimated payments under such obligations are $1.2 million for fiscal year 2025 and $0.1 million for fiscal year 2026.
We have further entered into license agreements under which we are obligated to make milestone and royalty payments and incur annual maintenance fees. The future milestone or royalty payment obligations under the agreement are contingent upon future events, such as achieving certain clinical and commercial milestones or generating product sales. As of December 31, 2024, we were unable to estimate the timing or likelihood of achieving these clinical and commercial milestones or generating future product sales. See the section titled “License and Collaboration Agreements” elsewhere in this Annual Report as well as Note 9 to our annual consolidated financial statements appearing elsewhere in this Annual Report for a description of our license agreements.
Indemnification agreements
In the ordinary course of business, we may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, we have entered into indemnification agreements with members of our board of directors and executive officers that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments we could be required to make under these indemnification agreements is, in many cases, unlimited. To date, we have not incurred any material costs as a result of such indemnifications. We are not aware of any indemnification arrangements could have a material effect on our financial position, results of operations or cash flows, and we have not accrued any liabilities related to such obligations in our consolidated financial statements as of December 31, 2024.
Critical Accounting Estimates
This management’s discussion and analysis is based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reported periods. We base our estimates on historical experience, known trends and events, and various other factors that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts, and experience. The effects of material revisions in estimates, if any, will be reflected in the consolidated financial statements prospectively from the date of change in estimates.
While our accounting policies are described in more detail in the notes to our consolidated financial statements appearing elsewhere in this Annual Report, we believe the following accounting policies used in the preparation of our consolidated financial statements require the most significant judgments and estimates. See Note 2 to our annual consolidated financial statements included elsewhere in this Annual Report for a description of our other significant accounting policies.
Revenue Recognition
In the year ended December 31, 2024, our revenue was generated from the Bristol-Myers Squibb collaboration agreement and the Roche collaboration and license agreement.
We recognize revenue in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 606, Revenue from Contracts with Customers, or ASC 606. We enter into collaboration and license agreements, which are within the scope of ASC 606, to discover, develop, manufacture, and commercialize product candidates. The terms of these agreements typically contain multiple promises or obligations, which may include: (i) licenses to compounds directed to specific targets (referred to as “exclusive licenses”) and (ii) research and development activities to be performed on behalf of the collaboration partner related to the licensed targets. Payments to us under these agreements may include non-refundable license fees, customer option exercise fees, payments for research activities, reimbursement of certain costs, payments based upon the achievement of certain milestones and royalties on any resulting net product sales.
Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, we perform the following five steps: (i) we identify the contract(s) with a customer; (ii) we identify the performance obligations in the contract; (iii) we determine the transaction price; (iv) we allocate the transaction price to the performance obligations in the contract; and (v) we recognize revenue when (or as) we satisfy a performance obligation. We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, we assess the goods or services promised within each contract and determine those that are performance obligations and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
As part of the accounting for these arrangements, we must use significant judgment to determine: a) the number of performance obligations based on the determination under step (ii) above and whether those performance obligations are distinct from other performance obligations in the contract; b) the transaction price under step (iii) above; and c) the stand-alone selling price for each performance obligation identified in the contract for the allocation of transaction price in step (iv) above. We use judgment to determine whether milestones or other variable consideration, except for sales-based royalties, should be included in the transaction price as described further below. The transaction price is allocated to each performance obligation on a relative stand-alone selling price basis, for which we recognize revenue as or when the performance obligations under the contract are satisfied. In determining the stand-alone selling price of a license to our proprietary technology or a material right provided by a customer option, we consider market conditions as well as entity-specific factors, including those factors contemplated in negotiating the agreements as well as internally developed estimates that include assumptions related to the market opportunity, estimated development costs, probability of success and the time needed to commercialize a product candidate pursuant to the license. In validating estimated stand-alone selling price, we evaluate whether changes in the key assumptions used to determine estimated stand-alone selling price will have a significant effect on the allocation of arrangement consideration between performance obligations.
Amounts received prior to revenue recognition are recorded as deferred revenue. Amounts expected to be recognized as revenue within one year following the balance sheet date are classified as current portion of deferred revenue in the accompanying consolidated balance sheets. Amounts not expected to be recognized as revenue within one year following the balance sheet date are classified as deferred revenue, net of current portion. Amounts recognized as revenue, but not yet received or invoiced are generally recognized as contract assets.
Exclusive Licenses – If the license to our intellectual property is determined to be distinct from the other promises or performance obligations identified in the arrangement, which generally include research and development services, we recognize revenue from non-refundable, upfront fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. In assessing whether a license is distinct from the other promises, we consider relevant facts and circumstances of each arrangement, including the research and development capabilities of the collaboration partner and the availability of the associated expertise in the general marketplace. In addition, we consider whether the collaboration partner can benefit from the license for its intended purpose without the receipt of the remaining promises, whether the value of the license is dependent on the unsatisfied promises, whether there are other vendors that could provide the remaining promises and whether it is separately identifiable from the remaining promises. For licenses that are combined with other promises, we utilize judgment to assess the nature of the combined performance obligation and whether the license is the predominant promise within the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue. If the license is the predominant promise, and it is determined that the license represents functional intellectual property, revenue is recognized at the point in time when control of the license is transferred. If it is determined that the license does not represent functional intellectual property, revenue is recognized over time using an appropriate method of measuring progress. We have recognized revenue related to such licenses from our Roche collaboration and license agreement.
Research and Development Services – The obligations under our collaboration and license agreements generally include research and development services to be performed by us to benefit the collaboration partner. For performance obligations that include research and development services, we generally recognize revenue allocated to such performance obligations based on an appropriate measure of progress. We utilize judgment to determine the appropriate method of measuring progress for purposes of recognizing revenue, which is generally an input measure such as costs incurred. We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. The measure of progress, and thereby periods of which revenue should be recognized, are subject to estimates by management and may change over the course of the contract. Reimbursements from the partner that are the result of a collaborative relationship with the partner, instead of a customer relationship, such as co-development activities, are recorded as a reduction to research and development expense. We have recognized revenue related to such research and development services from our Bristol-Myers Squibb collaboration agreement and our Roche collaboration and license agreement.
Customer Options – Our arrangements may provide a collaborator with the right to acquire additional goods or services in the future. Under these agreements, fees may be due to us (i) at the inception of the arrangement as an upfront fee or payment or (ii) upon the exercise of the customer option. If an arrangement is determined to contain customer options that allow the customer to acquire additional goods or services, the goods and services underlying the customer options are not considered to be performance obligations at the outset of the arrangement, as they are contingent upon option exercise. We evaluate the customer options for material rights, or options to acquire additional goods or services for free or at a discount. If the customer options are determined to represent a material right, the material right is recognized as a separate performance obligation at the inception of the arrangement. We allocate the transaction price to material rights based on the relative stand-alone selling price, which is determined based on the identified discount and the probability that the customer will exercise the option. Amounts allocated to a material right are not recognized as revenue until, at the earliest, the option is exercised or expires. We have recognized revenue related to such customer options from our Bristol-Myers Squibb collaboration agreement.
Milestone Payments – At the inception of each arrangement that includes development milestone payments, we evaluate whether the milestones are considered probable of being achieved and estimate the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within our control or the control of the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. We evaluate factors such as the scientific, clinical, regulatory, commercial, and other risks that must be overcome to achieve the particular milestone in making this assessment. There is considerable judgment involved in determining whether it is probable that a significant revenue reversal would not occur. At the end of each subsequent reporting period, we reevaluate the probability of achievement of all milestones subject to constraint and, if necessary, adjust our estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment. If a milestone or
other variable consideration relates specifically to our efforts to satisfy a single performance obligation or to a specific outcome from satisfying the performance obligation, we generally allocate the milestone amount entirely to that performance obligation once it is probable that a significant revenue reversal would not occur.
Royalties – For arrangements that include sales-based royalties, including milestone payments based on a level of sales, and the license is deemed to be the predominant item to which the royalties relate, we recognize revenue at the later of (i) when the related sales occur or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, we have not recognized any royalty revenue resulting from any of our licensing arrangements.
Accrued and Prepaid Research and Development Expenses
As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued and prepaid research and development expenses as of each balance sheet date. This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf, and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost. The majority of our service providers invoice us monthly in arrears for services performed or when contractual milestones are met. We make estimates of our accrued and prepaid expenses as of each balance sheet date based on facts and circumstances known to us at that time. We periodically confirm the accuracy of our estimates with the service providers and make adjustments if necessary.
We base our expenses related to research and development activities on our estimates of the services received and efforts expended pursuant to quotes and contracts with vendors that conduct research and development on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the research and development expense. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or prepaid balance accordingly. Non-refundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made.
Although we do not expect our estimates to be materially different from amounts incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed, it could result in us reporting amounts that are too high or too low in any particular period.
Share-Based Compensation
We measure share-based compensation based on the grant date fair value of the share-based awards and recognize share-based compensation expense on a straight-line basis over the requisite service period of the awards, which is generally the vesting period of the respective award. For non-employee awards, compensation expense is recognized as the services are provided, which is generally ratably over the vesting period.
Share-based compensation expense is classified in our consolidated statements of operations and comprehensive loss based on the function to which the related services are provided. We recognize share-based compensation expense for the portion of awards that have vested. Forfeitures are accounted for as they occur.
The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model, which requires inputs based on certain subjective assumptions, including the expected share price volatility, the expected term of the option, the risk-free interest rate for a period that approximates the expected term of the option, and our expected dividend yield. The fair value of each restricted share unit is estimated on the date of grant based on the fair value of our common share on that same date. Prior to our IPO, as there was no public market for our common shares, we determined the volatility for awards granted based on an analysis of reported data for a group of guideline companies that issued options with substantially similar terms. The expected volatility has been determined using a weighted-average of the historical volatility measures of this group of guideline companies blended
with the historical volatility of our common shares. We expect to continue using such methodology until we have adequate historical data regarding the volatility of the trading price of our common shares on Nasdaq. The expected term of our options granted to employees has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. With the adoption of ASU 2018-07, we applied the nonpublic entity practical expedient for calculating the expected term of non-employee awards, using the midpoint between the vesting date and the contractual term, which is consistent with the method used for employee awards. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. We have not paid, and do not anticipate paying, cash dividends on our common shares; therefore, the expected dividend yield is assumed to be zero.
Recent Accounting Pronouncements
See note 2 to our annual consolidated financial statements appearing elsewhere in this Annual Report for a description of recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted.
Item 7A. Quantitative and Qualitati ve Disclosures About Market Risk.
Under SEC rules and regulations, because we are considered to be a “smaller reporting company”, we are not required to provide the information required by this item in this report.
Item 8. Financial Statement s and Supplementary Data.
REPARE THERAPEUTICS INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID: 1263 )
Consolidated Balance Sheets as of December 31, 2024 and 2023
Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2024 and 2023
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2024 and 2023
Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023
Notes to Consolidated Financial Statements
Report of Independent R egistered Public Accounting Firm
To the Shareholders and the Board of Directors of Repare Therapeutics Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Repare Therapeutics Inc. (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, shareholders’ equity, and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023 and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (the “ PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Accrued and Prepaid Research and Development Expenses
Description of the matter
As described in note 2 to the consolidated financial statements, the Company has entered into various research and development contracts with third parties and is required to record its accrued and prepaid research and development expenses resulting from these contracts at the end of each reporting period. When evaluating the adequacy of the accrued liabilities and prepaid expenses, the Company analyzes progress of the studies, including the phase or
completion of events, invoices received and contracted costs. As of December 31, 2024, the Company has recorded $13.4 million of accrued research and development expenses and has also recorded total prepaid expenses of $6.0 million, which included amounts for prepayments of research and development expenses. The Company’s determination of the amount of accrued or prepaid expenses at each reporting period requires significant judgment and estimates by management in certain circumstances, as estimates are based on management’s knowledge of the services provided by the third parties to date but not yet invoiced.
Auditing the Company’s accrued and prepaid research and development expenses is challenging and required significant auditor effort in performing appropriate procedures to evaluate the completeness and accuracy of the information management utilizes in these estimates.
How we addressed the matter in our audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the Company’s process used in accounting for accrued and prepaid research and development expenses.
To test the accrued and prepaid research and development expenses, our audit procedures included, among others, testing the accuracy and completeness of the underlying data used by management to estimate the accrual or prepaid balance. To corroborate management’s estimates, we inspected a sample of contracts with third parties, obtained information regarding the progress of clinical trials from the Company’s research and development personnel that oversee the clinical trials and inspected a sample of data obtained from the third parties. We confirmed information directly with a sample of the third parties, such as the services provided and costs incurred, and the number of sites in the clinical trials. We also inspected subsequent invoices received from the third parties and cash disbursements made to these parties, to the extent such invoices were received, or payments were made prior to the date that the consolidated financial statements were issued.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2017.
Montréal, Canada
March 3, 2025
Repare Therapeutics Inc.
Consolidated B alance Sheets
(In thousands of U.S. dollars, except share data)
As of December 31,
ASSETS
Current assets:
Cash and cash equivalents
Marketable securities
Income tax receivable
Other current receivables
Prepaid expenses
Total current assets
Property and equipment, net
Operating lease right-of-use assets
Income tax receivable
Other assets
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable
Accrued expenses and other current liabilities
Operating lease liabilities, current portion
Deferred revenue, current portion
Total current liabilities
Operating lease liabilities, net of current portion
Deferred revenue, net of current portion
TOTAL LIABILITIES
Commitments and Contingencies
SHAREHOLDERS’ EQUITY:
Preferred shares, no par value per share; unlimited shares authorized as of
December 31, 2024 and December 31, 2023; 0 shares issued and outstanding
as of December 31, 2024 and December 31, 2023
Common shares, no par value per share; unlimited shares authorized as
of December 31, 2024 and December 31, 2023; 42,510,708 and 42,176,041
shares issued and outstanding as of December 31, 2024 and December 31, 2023,
respectively
Warrants
Additional paid-in capital
Accumulated other comprehensive income
Accumulated deficit
TOTAL SHAREHOLDERS’ EQUITY
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
The accompanying notes are an integral part of these consolidated financial statements
Repare Therapeutics Inc.
Consolidated Statements of Opera tions and Comprehensive Loss
(In thousands of U.S. dollars, except share and per share data)
Year Ended December 31,
Revenue:
Collaboration agreements
Operating expenses:
Research and development, net of tax credits
General and administrative
Restructuring
Total operating expenses
Loss from operations
Other income (expense), net
Realized and unrealized loss on foreign exchange
Interest income
Other expense, net
Total other income, net
Loss before income taxes
Income tax (expense) benefit
Net loss
Other comprehensive income:
Unrealized gain on available-for-sale marketable securities
Total other comprehensive income
Comprehensive loss
Net loss per share attributable to common shareholders—basic and diluted
Weighted-average common shares outstanding—basic and diluted
The accompanying notes are an integral part of these consolidated financial statements
Repare Therapeutics Inc.
Consolidated Statements o f Shareholders’ Equity
(In thousands of U.S. dollars, except share data)
Common Shares
Warrants
Additional
Accumulated Other Comprehensive
Accumulated
Total Shareholders'
Shares
Amount
Paid-in Capital
Income
Deficit
Equity
Balance, January 1, 2023
Exercise of vested stock options
Share-based compensation expense
Issuance of common shares under
the 2020 Employee Share
Purchase Plan
Other comprehensive income
Net loss
Balance, December 31, 2023
Exercise of vested stock options
Share-based compensation expense
Issuance of common shares under
the 2020 Employee Share
Purchase Plan
Issuance of common shares
on vesting of restricted
share units
Non-employee warrant expense
Other comprehensive income
Net loss
Balance, December 31, 2024
The accompanying notes are an integral part of these consolidated financial statements
Repare Therapeutics Inc.
Consolidated Stateme nts of Cash Flows
(In thousands of U.S. dollars)
Year Ended December 31,
Cash Flows From Operating Activities:
Net loss for the year
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation expense
Depreciation expense
Non-cash lease expense
Foreign exchange loss
Net accretion of marketable securities
Changes in operating assets and liabilities:
Prepaid expenses
Other current receivables
Other non-current assets
Accounts payable
Accrued expenses and other current liabilities
Operating lease liabilities, current portion
Income taxes
Operating lease liabilities, net of current portion
Deferred revenue
Net cash used in operating activities
Cash Flows From Investing Activities:
Purchase of property and equipment
Proceeds from maturities of marketable securities
Purchase of marketable securities
Net cash provided by investing activities
Cash Flows From Financing Activities:
Proceeds from exercise of stock options
Proceeds from issuance of common shares under the 2020 Employee Share Purchase Plan
Net cash provided by financing activities
Effect of exchange rate fluctuations on cash held
Net Decrease In Cash And Cash Equivalents
Cash and cash equivalents cash at beginning of year
Cash and cash equivalents at end of year
Supplemental Disclosure Of Cash Flow Information:
Cash interest received
Cash taxes paid, net
Right-of-use assets obtained in exchange for new operating lease liability
The accompanying notes are an integral part of these consolidated financial statements
REPARE THERAPEUTICS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars, except per share data, 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 to 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) .
Since inception, the Company has incurred operating losses. As of December 31, 2024, the Company had an accumulated deficit of $ 417.8 million . The Company does not have any products approved for sale and has financed its operations primarily through equity financings and funding from its collaboration and license agreements. Based on its current operating plan, the Company expects that its existing cash and cash equivalents and marketable securities on hand will be sufficient to fund its operating and capital expenditures for at least one year from the date of the issuance of these consolidated financial statements.
There can be no assurance that the Company will be able to obtain additional debt or equity financing, or generate product revenue or revenue from collaboration agreements, on a timely basis or at all. The failure of the Company to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on the Company’s business, results of operations and financial condition.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying 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”).
Principles of Consolidation
The accompanying 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
Repare qualified as a “smaller reporting company” under the Exchange Act as of June 30, 2024 because the market value of its common shares held by non-affiliates was less than $200 million as of June 30, 2024. As a smaller reporting company, Repare 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 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.
Foreign Currencies
The functional currency for the Company and Repare USA is the U.S. dollar (“USD”). Accordingly, transactions denominated in currencies other than the functional currency are measured and recorded in the functional currency at the exchange rate in effect on the date of the transactions. At each consolidated balance sheet date, monetary assets
and liabilities denominated in currencies other than the functional currency are remeasured using the exchange rate in effect at that date. Non-monetary assets and liabilities are not remeasured. Any gains or losses arising on remeasurement are included in the consolidated statement of operations.
Segment Information
Operating segments refer to components of a company that engage in activities for which separate financial information is available and reviewed regularly by the Chief Operating Decision Maker (CODM) in deciding how to allocate resources and assessing performance. The CODM is the Company's Chief Executive Officer. The Company manages its operations as a single operating segment, which is the research, development and eventual commercialization of precision oncology drugs targeting specific vulnerabilities of tumors in genetically defined patient populations.
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 consolidated financial statements include, but are not limited to, estimates related to revenue recognition, accrued and prepaid research and development expenses, share-based compensation, 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. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with original maturities of 90 days or less at acquisition to be cash equivalents. Cash and cash equivalents include cash held in banks, amounts held in money market funds and commercial paper with original maturities less than 90 days.
Marketable Securities
The Company classifies marketable debt securities with a remaining maturity of greater than three months when purchased as available-for-sale. Marketable debt securities with a remaining maturity date greater than one year from the consolidated balance sheet date are classified as non-current where the Company has the intent and ability to hold these securities for at least the next 12 months.
The Company’s marketable securities consist of U.S. treasury securities, government-sponsored enterprises securities, corporate debt securities and commercial paper with original maturities greater than 90 days. All of the Company’s marketable securities have a contractual maturity of one year or less. The Company considers its investment portfolio of U.S. treasury securities, government-sponsored enterprises securities, and commercial paper to be available-for-sale. Accordingly, these investments are recorded at fair value, which is based on observable inputs, other than quoted market prices. Unrealized gains and losses are reported in accumulated other comprehensive items in shareholders’ equity. Amortization and accretion of premiums and discounts are recorded in interest income (expense). Realized gains or losses on debt securities are included in other income (expense).
The Company reviews investments whenever the fair value of an investment is less than the amortized cost and evidence indicates that an investment’s carrying amount is not recoverable within a reasonable period of time. In connection therewith, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors, considering the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security is compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss on the consolidated balance sheet, limited by the amount that the fair value is less than the amortized cost basis. Any
impairment that is not related to credit is recognized in other comprehensive loss. Changes in the allowance for credit losses are recorded as a provision for (or reversal of) credit loss expense in other income (expense), net within the consolidated statement of operations. Losses are charged against the allowance when the Company believes the uncollectibility of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met.
Concentrations of Credit Risk and Off-Balance Sheet Risk
Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents and marketable securities. Our investment portfolio comprises money market funds, U.S. treasury securities, government-sponsored enterprises securities, corporate debt securities and commercial paper. Our investment policy limits investment instruments to investment-grade securities with the objective to preserve capital and to maintain liquidity until the funds can be used in business operations.
The Company maintains deposits in accredited financial institutions which exceed insured limits. The Company deposits its cash in financial institutions that it believes have high credit quality and has not experienced any losses on such accounts and does not believe it is exposed to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships.
The Company’s exposure to foreign exchange risk is primarily related to fluctuations between the Canadian dollar and the U.S. dollar. There are balances in Canadian dollars which are subject to foreign currency fluctuations relating to the impact of translating to U.S. dollars for financial statement presentation.
As of December 31, 2024 and 2023 , the Company had no significant off-balance sheet risk, such as foreign exchange contracts, option contracts or other foreign hedging arrangements.
Comprehensive Loss
Comprehensive loss includes net loss as well as other changes in shareholders’ equity that result from transactions and economic events other than those with shareholders. Other comprehensive income consists of unrealized gains and losses on available-for-sale marketable securities. Total comprehensive loss for all periods presented has been disclosed in the consolidated statements of operations and comprehensive loss.
Fair Value Measurements
Certain assets of the Company are carried at fair value under U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets 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.
To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
The estimated fair values of the Company’s cash and cash equivalents, other current receivables, other assets, accounts payable, and accrued expenses and other current liabilities approximate their carrying values.
The Company’s marketable securities are carried at fair value, determined according to Level 2 inputs in the fair value hierarchy described above.
Property and Equipment, Net
Property and equipment is stated at historical cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, which are as follows:
Asset Category
Estimated Useful Lives
Computer equipment
3 years
Office equipment
5 years
Laboratory equipment
5 years
Leasehold improvements
the shorter of the lease term and the useful life
When assets are retired or disposed of, the assets and related accumulated depreciation are derecognized from the accounts, and any resulting gain or loss is included in the determination of net loss. Expenditures for maintenance and repairs are recorded to expense as incurred.
Impairment of Long-Lived Assets
The Company evaluates its finite-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of assets may not be recoverable. Recoverability of these assets is measured by comparing their carrying value to the future net undiscounted cash flows the assets are expected to generate over their remaining economic life. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying value of the assets exceeds their fair value. Indefinite-lived intangible assets are tested for impairment annually, or more frequently if indicators of impairment are present. To date, no such impairment losses have been recorded.
Leases
At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement. Leases with a term greater than one year are recognized on the consolidated balance sheet as a right-of-use asset and current and non-current lease liabilities, as applicable.
Operating lease liabilities and their corresponding right-of-use assets are initially recorded based on the present value of lease payments over the expected remaining lease term. Certain adjustments to the right-of-use asset may be required for items such as incentives received. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rate to discount lease payments, which reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. Prospectively, the Company will adjust the right-of-use assets for straight-line rent expense or any incentives received and remeasure the lease liability at the net present value using the same incremental borrowing rate that was in effect as of the lease commencement or transition date.
The Company typically only includes an initial lease term in its assessment of a lease arrangement. Options to renew a lease are not included in the Company’s assessment unless there is reasonable certainty that the Company will renew.
Assumptions made by the Company at the commencement date are re-evaluated upon occurrence of certain events, including a lease modification. A lease modification results in a separate contract when the modification grants the lessee an additional right of use not included in the original lease and when lease payments increase commensurate with the standalone price for the additional right of use. When a lease modification results in a separate contract, it is accounted for in the same manner as a new lease.
In accordance with ASC 842, components of a lease should be split into three categories: lease components, non-lease components and non-components. The fixed and in-substance fixed contract consideration (including any consideration related to non-components) must be allocated based on the respective relative fair values to the lease components and non-lease components.
Entities may elect not to separate lease and non-lease components. The Company has elected to account for lease and non-lease components together as a single lease component for all underlying assets and allocate all of the contract consideration to the lease component only.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
The Company enters into collaboration and license agreements, which are within the scope of ASC 606, to discover, develop, manufacture, and commercialize product candidates. The terms of these agreements typically contain multiple promises or obligations, which may include: (i) licenses to compounds directed to specific targets (referred to as “exclusive licenses”) and (ii) research and development activities to be performed on behalf of the collaboration partner related to the licensed targets. Payments to the Company under these agreements may include non-refundable license fees, customer option exercise fees, payments for research activities, reimbursement of certain costs, payments based upon the achievement of certain milestones and royalties on any resulting net product sales.
The Company first evaluates license and/or collaboration arrangements to determine whether the arrangement (or part of the arrangement) represents a collaborative arrangement pursuant to ASC 808, Collaborative Arrangements (“ASC 808”), based on the risks and rewards and activities of the parties pursuant to the contractual arrangement. The Company accounts for collaborative arrangements (or elements within the contract that are deemed part of a collaborative arrangement), which represent a collaborative relationship and not a customer relationship, outside the scope of ASC 606, pursuant to ASC 808.
The Company’s collaborations primarily represent revenue arrangements. For the arrangements or arrangement components that are subject to revenue accounting guidance, in determining the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements, the Company applies the five-step model. As part of the accounting for these arrangements, the Company must use significant judgment to determine: a) the number of performance obligations based on the determination under step (ii) above and whether those performance obligations are distinct from other performance obligations in the contract; b) the transaction price under step (iii) above; and c) the stand-alone selling price for each performance obligation identified in the contract for the allocation of transaction price in step (iv) above. The Company uses judgment to determine whether milestones or other variable consideration, except for sales-based royalties, should be included in the transaction price as described further below. The transaction price is allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied. In determining the stand-alone selling price of a license to the Company’s proprietary technology or a material right provided by a customer option, the Company considers market conditions as well as entity-specific factors, including those factors contemplated in negotiating the agreements as well as internally developed estimates that include assumptions related to the market opportunity, estimated development costs, probability of success and the time needed to commercialize
a product candidate pursuant to the license. In validating its estimated stand-alone selling price, the Company evaluates whether changes in the key assumptions used to determine its estimated stand-alone selling price will have a significant effect on the allocation of arrangement consideration between performance obligations.
Amounts received prior to revenue recognition are recorded as deferred revenue. Amounts expected to be recognized as revenue within one year following the balance sheet date are classified as current portion of deferred revenue in the accompanying consolidated balance sheets. Amounts not expected to be recognized as revenue within one year following the balance sheet date are classified as deferred revenue, net of current portion. Amounts recognized as revenue, but not yet received or invoiced are recognized as contract assets.
Exclusive Licenses – If the license to the Company’s intellectual property is determined to be distinct from the other promises or performance obligations identified in the arrangement, which generally include research and development services, the Company recognizes revenue from non-refundable, upfront fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. In assessing whether a license is distinct from the other promises, the Company considers relevant facts and circumstances of each arrangement, including the research and development capabilities of the collaboration partner and the availability of the associated expertise in the general marketplace. In addition, the Company considers whether the collaboration partner can benefit from the license for its intended purpose without the receipt of the remaining promises, whether the value of the license is dependent on the unsatisfied promises, whether there are other vendors that could provide the remaining promises and whether it is separately identifiable from the remaining promises. For licenses that are combined with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation and whether the license is the predominant promise within the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue. If the license is the predominant promise, and it is determined that the license represents functional intellectual property (“IP”), revenue is recognized at the point in time when control of the license is transferred. If it is determined that the license does not represent functional IP, revenue is recognized over time using an appropriate method of measuring progress.
Research and Development Services – The obligations under the Company’s collaboration and license agreements generally include research and development services to be performed by the Company to benefit the collaboration partner. For performance obligations that include research and development services, the Company generally recognizes revenue allocated to such performance obligations based on an appropriate measure of progress. The Company utilizes judgment to determine the appropriate method of measuring progress for purposes of recognizing revenue, which is generally an input measure such as costs incurred. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. The measure of progress, and thereby periods of which revenue should be recognized, are subject to estimates by management and may change over the course of the contract. Reimbursements from the partner that are the result of a collaborative relationship with the partner, instead of a customer relationship, such as co-development activities, are recorded as a reduction to research and development expense.
Customer Options – The Company’s arrangements may provide a collaborator with the right to acquire additional goods or services in the future. Under these agreements, fees may be due to the Company (i) at the inception of the arrangement as an upfront fee or payment or (ii) upon the exercise of the customer option. If an arrangement is determined to contain customer options that allow the customer to acquire additional goods or services, the goods and services underlying the customer options are not considered to be performance obligations at the outset of the arrangement, as they are contingent upon option exercise. The Company evaluates the customer options for material rights, or options to acquire additional goods or services for free or at a discount. If the customer options are determined to represent a material right, the material right is recognized as a separate performance obligation at the inception of the arrangement. The Company allocates the transaction price to material rights based on the relative stand-alone selling price, which is determined based on the identified discount and the probability that the customer will exercise the option. Amounts allocated to a material right are not recognized as revenue until, at the earliest, the option is exercised or expires.
Milestone Payments – At the inception of each arrangement that includes development milestone payments, the Company evaluates whether the milestones are considered probable of being achieved and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue
reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The Company evaluates factors such as the scientific, clinical, regulatory, commercial, and other risks that must be overcome to achieve the particular milestone in making this assessment. There is considerable judgment involved in determining whether it is probable that a significant revenue reversal would not occur. At the end of each subsequent reporting period, the Company reevaluates the probability of achievement of all milestones subject to constraint and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment. If a milestone or other variable consideration relates specifically to the Company’s efforts to satisfy a single performance obligation or to a specific outcome from satisfying the performance obligation, the Company generally allocates the milestone amount entirely to that performance obligation once it is probable that a significant revenue reversal would not occur.
Royalties – For arrangements that include sales-based royalties, including milestone payments based on a level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any royalty revenue resulting from any of its licensing arrangements.
For a complete discussion of accounting for collaboration revenues, s ee Note 15.
Research and Development Expenses
Research and development costs are expensed as incurred. The Company’s research and development expenses consist primarily of costs incurred in performing research and development activities, including salaries and other compensation, share-based compensation, fees paid to external service providers, laboratory supplies and costs for facilities and equipment, partially offset by fully refundable research and development tax credits.
Accrued and Prepaid Research and Development Expenses
The Company has entered into various research and development contracts with research institutions, outside consultants, contract research organizations and clinical manufacturing organizations that conduct and manage preclinical studies and clinical trials on the Company’s behalf based on actual time and expenses incurred. The payments for these vendors are recorded as research and development expenses as incurred. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the research and development expense.
The Company records accrued liabilities and prepaid expenses for the estimated costs of research and development activities based upon the estimated services provided but not yet invoiced. When evaluating the adequacy of the accrued liabilities and prepaid expenses, the Company analyzes progress of the studies, including the phase or completion of events, invoices received and contracted costs. The Company accrues the expenses for its clinical trial activities performed by third-party vendors, including contract research organizations and clinical sites, based upon estimates of the proportion of work completed over the life of the individual clinical trial, activities performed by patient and patient enrollment rates in accordance with associated agreements. Significant judgements and estimates are made in determining the accrued and prepaid balances at the end of any reporting period. Actual results could differ from the Company’s estimates.
Share-Based Compensation
The Company accounts for all share-based awards granted to employees and non-employees as share-based compensation expense at fair value.
The measurement date for employee and non-employee awards is the date of grant, and share-based compensation costs are recognized over the employees’ requisite service period, which is the vesting period, on a straight-line basis. Forfeitures are accounted for as they occur.
The fair value of each restricted share unit is estimated on the date of grant based on the fair value of the Company’s common share on that same date. The fair value of each stock option grant or purchases under the Company’s 2020 Employee Share Purchase Plan (“ESPP”) is estimated on the date of grant using the Black-Scholes option-pricing model, which requires inputs based on certain subjective assumptions, including the expected share price volatility, the expected term of the option, the risk-free interest rate for a period that approximates the expected term of the option and the Company’s expected dividend yield. As there was no public market for its common shares prior to its IPO in June 2020, the Company determined the volatility for stock option awards granted based on an analysis of reported data for a group of guideline companies that issued options with substantially similar terms. The expected volatility has been determined using a weighted-average of the historical volatility measures of this group of guideline companies blended with the historical volatility of the Company’s common shares. The Company expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded share price. For purchases under our ESPP, only the historical volatility of the Company’s common shares is used when developing an estimate of expected volatility. The expected term of the Company’s stock options granted to employees and non-employees has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. In connection with the adoption of ASU No. 2018-07, Compensation—Stock Compensation (“ASU No. 2018-07”), the Company calculated the expected term of non-employee awards using the midpoint between the vesting date and the contractual term, which is consistent with the method used for employee awards. For purchases under our ESPP, the expected term is based on the length of the offering period. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award, for time periods approximately equal to the expected term of the award. The Company has not paid, and does not anticipate paying, cash dividends on its common shares; therefore, the expected dividend yield is assumed to be zero .
Share-based compensation is classified in the accompanying consolidated statements of operations and comprehensive loss based on the function to which the related services are provided. Any consideration paid by employees on exercising stock options or the purchases under our ESPP and the corresponding portion previously credited to additional paid-in capital are credited to share capital.
Share Issuance Costs
Share issuance costs applicable to the issuance of equity instruments are recorded as a reduction of the financing equity proceeds.
Net Loss per Share
Basic net loss per share attributable to common shareholders is computed by dividing the net loss attributable to common shareholders by the weighted-average number of common shares outstanding during the reporting period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common shareholders by the weighted-average number of common shares and potentially dilutive securities outstanding during the period determined using the treasury-stock and if-converted methods. For purposes of the diluted net loss per share calculation, options to purchase common shares, restricted share units and shares issuable under the ESPP considered to be potentially dilutive securities were excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive and therefore, basic and diluted net loss per share were the same for all reporting periods presented.
Income Taxes
The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements. Under this method, deferred tax assets and liabilities are determined based on differences between the consolidated financial statement carrying amounts and the tax bases of the assets and liabilities using the enacted tax rates in effect in the years in which the differences are expected to reverse. A valuation allowance against deferred tax assets is recorded if, based on the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
The Company accounts for uncertainty in income taxes recognized in the financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed
more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest and penalties.
Research and Development Tax Credits
The Company recognizes the benefit of refundable Canadian research and development tax credits as a reduction of research and development costs when there is reasonable assurance that the amount claimed will be recovered.
Recently Adopted Accounting Pronouncements
In November 2023, the FASB amended the guidance in ASU 280, Segment Reporting, to require a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Public entities with a single reportable segment are required to provide the new disclosures and all the disclosures currently required under ASC 280. The new guidance is effective for public entities in fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted this amendment as of January 1, 2024 and amended its consolidated financial statements and disclosures accordingly.
Recently Issued Accounting Pronouncements Not Yet Adopted
In December 2023, the FASB amended the guidance in ASU 740, Income Taxes, to provide disaggregated income tax disclosures on the rate reconciliation and income taxes paid. The new guidance is effective for public entities in fiscal years beginning after 15 December 2024. Early adoption is permitted. The Company is currently assessing the impact of this amendment on its consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring public business entities to provide additional disclosures on specific expense categories in the notes to financial statements for both interim and annual reporting periods. While the amendments don’t change current disclosure requirements, they change where this information must be presented, requiring certain disclosures to be in a tabular format alongside other disaggregation details. This ASU is effective for annual periods starting after December 15, 2026, and interim periods after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this ASU on its consolidated financial statements.
3. Cash and Cash Equivalents and Marketable Securities
As of December 31, 2024 and 2023, cash and cash equivalents and marketable securities were comprised of the following:
Amortized Cost
Unrealized Gains
Unrealized Losses
Fair Value
(in thousands)
As at December 31, 2024
Cash and cash equivalents:
Cash
Money market funds
Commercial paper
Total cash and cash equivalents
Marketable securities:
U.S. Treasury and government-sponsored enterprises
Commercial paper
Corporate debt securities
Total marketable securities
As at December 31, 2023
Cash and cash equivalents:
Cash
Money market funds
Commercial paper
Total cash and cash equivalents
Marketable securities:
U.S. Treasury and government-sponsored enterprises
Commercial paper
Total marketable securities
Interest receivable was $ 0.4 million and $ 0.4 million as of December 31, 2024 and 2023, respectively, and is included in other current receivables.
The Company held available-for-sale marketable securities with an aggregate fair value of $ 7.8 million and $ 58.6 million that were in an unrealized loss position as of December 31, 2024 and 2023, respectively. These marketable securities have been in an unrealized loss position for less than twelve months. The unrealized losses as of December 31, 2024 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 no t record an allowance for credit losses or other impairment charges for its marketable securities for the year ended December 31, 2024.
The Company recognized nil and $ 0.5 million net unrealized gain in other comprehensive income for the years ended December 31, 2024 and 2023, respectively.
The maturities of the Company’s marketable securities as of December 31, 2024 and 2023 are less than one year.
4. 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:
Description
Financial Assets
Level 1
Level 2
Level 3
(in thousands)
As at December 31, 2024
Assets
Cash equivalents:
Money market funds
Commercial paper
Total cash equivalents
Marketable securities:
U.S. Treasury and government-sponsored enterprises
Commercial paper
Corporate debt securities
Total marketable securities
Total financial assets
As at December 31, 2023
Assets
Cash equivalents:
Money market funds
Commercial paper
Total cash equivalents
Marketable securities:
U.S. Treasury and government-sponsored enterprises
Commercial paper
Total marketable securities
Total financial assets
When developing fair value estimates, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs. When available, the Company uses quoted market prices to measure the fair value. In determining the fair values at each date presented above, the Company relied on quoted prices for similar securities in active markets or using other inputs that are observable or can be corroborated by observable market data.
During the years ended December 31, 2024 and 2023 , there were no transfers between fair value measure levels.
5. Other Current Receivables
Other current receivables as of December 31, 2024 and 2023 consisted of the following:
December 31,
(in thousands)
Research and development tax credits receivable
Collaboration revenue receivable
Sales tax and other receivables
Total other current receivables
6. Property and Equipment, Net
Property and equipment, net as of December 31, 2024 and 2023 consisted of the following:
December 31,
(in thousands)
Computer equipment
Office equipment
Laboratory equipment
Leasehold improvements
Total
Less: Accumulated depreciation
Property and equipment, net
Depreciation expense recognized was allocated as follows:
Year Ended December 31,
(in thousands)
Research and development
General and administration
Depreciation expense
7. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities as of December 31, 2024 and 2023 consisted of the following:
December 31,
(in thousands)
Accrued research and development expense
Accrued compensation and benefits
Accrued professional services
Accrued restructuring expenses
Other
Total accrued expenses and other current liabilities
8. Restructuring Expense
In August 2024, the Company announced a strategic reprioritization of the Company's research and development activities to focus its efforts on the advancement of its portfolio of clinical-stage oncology programs. As part of this strategic refocus, the Company reduced its overall workforce by approximately 25 %, with a majority of the headcount reductions from the Company’s preclinical group. For the twelve months ended December 31, 2024, the Company incurred approximately $ 1.4 million ( nil - 2023) in costs as part of this strategic refocus, comprised primarily of severance and termination benefits.
9. License Agreements
In December 2016, as further amended in February 2017 and amended and restated in July 2018, the Company entered into a license agreement (the “NYU Agreement”) with New York University, pursuant to which the Company obtained a worldwide, royalty-bearing, exclusive license under certain patents and know-how of New York University to research, develop and commercialize products covered by such licensed patents. The Company is required to pay New
York University an annual non-refundable license fee, which is creditable against future milestone and royalty payments. The Company is required to pay amounts up to approximately $ 6.7 million in the aggregate upon achievement of certain clinical and commercial milestones and pay a low single digit royalty on future net sales of any product covered by a licensed product and a lower-single digit royalty on future net sales of any product not covered by a licensed product. The NYU Agreement expires on the date of expiration of all royalty obligations.
In October 2024, the dosing of the first patient in the Company's POLAR Phase 1 dose finding clinical trial of RP-3467 alone and in combination with the poly-ADP ribose PARP inhibitor, olaparib, triggered the payment of a $ 0.1 million milestone to New York University under the terms of the NYU Agreement.
Any potential future milestone or royalty payment amounts have no t been accrued at December 31, 2024 and 2023 due to the uncertainty related to the successful achievement of these milestones.
10. Leases
The Company has historically entered into lease arrangements for its facilities and certain equipment. As of December 31, 2024 , the Company had four operating leases with required future minimum payments. The Company’s leases generally do not include termination or purchase options.
Operating Leases
In June 2017, and as further amended in 2021, the Company entered into a lease agreement for office and laboratory space in Montréal, Qué bec, for a four-year term, ending in July 2021 . In August 2021, the lease was extended through July 2025 .
In November 2017, and as further amended throughout 2018, 2019, 2020, 2021 and 2022, the Company entered into a lease agreement for office and laboratory space located in Montréal, Qué bec, for a three-year term ending in October 2020 , which was extended through December 2022 . In January 2023, and as further amended in April 2023, the Company entered into a lease renewal agreement for a thirty-two month term, ending in August 2025 .
In July 2021, the Company entered into a lease agreement for office space in Cambridge, Massachusetts, for a three-year term ended December 2024 , which commenced in December 2021. The Company had an option for a three year renewal, which was not recognized in the Company’s right-of-use asset or lease liability. In August 2024, the Company entered into a twelve-month renewal agreement for the space, ending in January 2026 , which will result in additional minimum lease payments of $ 1.1 million over the twelve-month extended lease term .
In November 2019, and as further amended in July 2021, the Company entered into a lease agreement for office and laboratory space for a five-year term located in Montr éal, Qué bec which commenced in September 2020. The Company has an option for a five year renewal, which has not been recognized in the Company’s right-of-use asset or lease liability.
During the third quarter of 2024, the Company determined the carrying value of the right-of-use asset related to the office and laboratory space in Montréal, Québec was no longer recoverable and wrote the balance down to its estimated fair value of nil. The resulting impairment loss of $ 0.1 million is reflected within research and development expenses.
The following tables contains a summary of the lease costs recognized under ASC 842 and other information pertaining to the Company’s operating leases for the years ended December 31, 2024 and 2023:
December 31,
(in thousands)
Operating Leases
Lease Cost
Operating lease cost
Short-term lease cost
Variable lease cost
Total lease cost
December 31,
(in thousands, except as specified otherwise)
Other Operating Lease Information
Operating cash flows for operating leases
Right-of-use assets obtained in exchange for lease obligations
Weighted-average remaining lease term (in years)
Weighted-average discount rate
Variable lease costs for the years ended December 31, 2024 and 2023 include contingent rental usage, common area maintenance and other operating charges.
Future minimum lease payments under the Company’s operating leases as of December 31, 2024 were as follows:
December 31,
(in thousands)
Maturity of Lease Liabilities
Thereafter
Total lease payments
Less: interest
Total lease liabilities
11. Shareholders’ Equity
Preferred Shares
Effective upon the closing of the IPO, the Company authorized for issue an unlimited number of preferred shares, issuable in series, having such designations, rights, privileges, restrictions and conditions, including dividend and voting rights as the board of directors of the Company may determine, and such rights and privileges, including dividend and voting rights, may be superior to those of the common shares. No preferred shares were issued and outstanding as of December 31, 2024 and 2023.
Common Shares
The articles of continuance of the Company authorize an unlimited number of common shares, voting and participating, without par value.
Each common share entitles the holder to one vote on all matters submitted to the shareholders for a vote. The holders of common shares are entitled to receive dividends, as may be declared by the board of directors, if any. Through December 31, 2024 , no dividends have been declared or paid.
In August 2022, the Company entered into a sale agreement (the “2022 Sales Agreement”), with Cowen and Company, LLC. acting as agent. In November 2024, the Company entered into a Common Shares Sale Agreement (the "2024 Sales Agreement"), with TD Securities (USA) LLC to replace the 2022 Sales Agreement, pursuant to which we may sell up to $ 100.0 million in common shares. During the years ended December 31, 2024 and 2023 , the Company did no t issue or sell shares under the 2022 Sales Agreement or 2024 Sales Agreement.
12. Share-Based Compensation
2020 Employee Share Purchase Plan
In June 2020, the Company’s board of directors adopted, and the Company’s shareholders approved the 2020 Employee Share Purchase Plan (“ESPP”). The number of shares reserved and available for issuance under the ESPP will automatically increase each January 1, beginning on January 1, 2021 and each January 1 thereafter through January 31, 2030, by the lesser of (1) 1.0 % of the total number of common shares outstanding on December 31 of the preceding calendar year, (2) 3,300,000 common shares, or (3) such smaller number of common shares as the Company’s board of directors may designate. As of January 1, 2025, the number of common shares that may be issued under the ESPP is 2,132,500 .
The ESPP enables eligible employees to purchase common shares of the Company at the end of each offering period at a price equal to 85 % of the fair market value of the shares on the first business day or the last business day of the offering period, whichever is lower. Participation in the ESPP is voluntary. Eligible employees become participants in the ESPP by enrolling in the plan and authorizing payroll deductions. At the end of each offering period, accumulated payroll deductions are used to purchase the Company’s shares at the discounted price. The Company makes no contributions to the ESPP. A participant may withdraw from the ESPP or suspend contributions to the ESPP. If the participant elects to withdraw during an offering, all contributions are refunded as soon as administratively practicable. If a participant elects to withdraw or suspend contributions, they will not be able to re-enroll in the current offering but may elect to participate in future offerings. A participant may only purchase whole shares of the Company’s common shares in the ESPP. ESPP offering periods are offered on a rolling six-month basis.
For the years ended December 31, 2024 and 2023 the Company issued 125,793 and 75,608 common shares under the ESPP, respectively, at an average price per share of $ 4.17 and $ 9.11 , respectively. Cash received from purchases under the ESPP for the years ended December 31, 2024 and 2023 was $ 0.5 million and $ 0.7 million , respectively. In February 2025, the Company issued 73,239 common shares under the ESPP at an average price per share of $ 1.08 .
The assumptions that the Company used in the Black Scholes option-pricing model to determine the grant date fair value under the ESPP offering were as follows:
Year Ended December 31,
Risk-free interest rate
Expected term (in years)
Expected volatility
Expected dividend yield
The weighted average grant date fair value of common shares offered and issued under the ESPP during the years ended December 31, 2024 and 2023 was $ 1.66 and $ 3.27 , respectively.
Option Plan and 2020 Plan
In December 2016, as further amended in December 2017 and September 2019, the Company adopted the Repare Therapeutics Inc. Option Plan (the “Option Plan”) for the issuance of stock options and other share-based awards to
directors, officers, employees or consultants. The Option Plan authorized up to 4,074,135 shares of the Company’s common shares to be issued.
In June 2020, the Company’s board of directors adopted, and the Company’s shareholders approved the 2020 Equity Incentive Plan (the “2020 Plan”). The 2020 Plan became effective on the effective date of the IPO, at which time the Company ceased making awards under the Option Plan. The 2020 Plan allows the Company’s compensation committee to make equity-based and cash-based incentive awards to the Company’s officers, employees, directors and consultants including but not limited to stock options and restricted share units. The aggregate number of common shares reserved and available for issuance under the 2020 Plan has automatically increased on January 1 of each year beginning on January 1, 2021 and will continue to increase on January 1 of each year through and including January 1, 2030, by 5 % of the outstanding number of common shares on the immediately preceding December 31, or such lesser number of shares as determined by the Company’s board of directors. As of January 1, 2025, the number of common shares reserved for issuance under the 2020 Plan is 14,269,641 .
The exercise price per share of stock option must be at least equal to the fair value of the common shares on the date of grant, as determined by the Company’s compensation committee or the Company’s board of directors. Stock options awarded under the 2020 Plan expire 10 years after the grant. Unless otherwise stated in a stock option agreement, options generally have vesting conditions of 25 % of the shares subject to an option grant typically vesting upon the first anniversary of the vesting start date and thereafter at the rate of one forty-eighth of the option shares per month as of the first day of each month after the first anniversary.
Inducement Grant and Inducement Plan
In May 2023, the compensation committee of the Company’s board of directors approved the grant of an inducement award to a newly hired member of the senior leadership team. The equity award, which was granted outside of the 2020 Plan, was an inducement material to such executive entering into employment with the Company, in accordance with Nasdaq Listing Rule 5635(c)(4). The stock option award to purchase an aggregate of 240,000 of the Company’s common shares has a ten-year term and an exercise price of $ 9.83 per share. The award has terms and conditions consistent with those set forth under the 2020 Plan and vests under the similar vesting schedules as stock option awards granted under the 2020 Plan. The inducement grant is included in the stock options table below.
In April 2024, the Company's board of directors approved the adoption of the 2024 Inducement Plan (the "Inducement Plan"), to be used exclusively for grants of awards to individuals who were not previously employees or directors (or following a bona fide period of non-employment) as a material inducement to such individual's entry into employment with the Company, pursuant to Nasdaq Listing Rule 5635(c)(4). The terms and conditions of the Inducement Plan are substantially similar to those of the 2020 Plan. 350,000 common shares were reserved for issuance under the Inducement Plan. As of December 31, 2024 , the number of common shares that may be issued under the Inducement Plan is 335,300 .
Warrants
In November 2024, the Company issued a warrant, as compensation for services to a consultant, to purchase up to 35,000 common shares of the Company at an exercise price of $ 3.61 per share, vesting in equal quarterly installments over a two-year period. The warrant expires 5 years after the grant date. Total share-based compensation expense of $ 0.07 million will be recognized over the two-year vesting period under general and administrative expenses.
Stock Options
The assumptions that the Company used in the Black Scholes option-pricing model to determine the grant date fair value of stock options granted to employees and non-employees were as follows, presented on a weighted-average basis:
Year Ended December 31,
Risk-free interest rate
Expected term (in years)
Expected volatility
Expected dividend yield
The weighted average grant date fair value of stock options granted during the years ended December 31, 2024 and 2023 was $ 4.70 and $ 8.18 , respectively.
The following table summarizes the Company’s stock options activity:
Number of
shares
Weighted
average
exercise
price
Weighted
average
remaining
contractual
term
(in years)
Intrinsic value (in thousands)
Outstanding, January 1, 2024
Granted
Exercised
Cancelled or forfeited
Outstanding, December 31, 2024
Options exercisable, December 31, 2024
Options unvested, December 31, 2024
The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common shares for those stock options that had an exercise price lower than the fair value of the Company’s common shares.
The aggregate intrinsic value of options exercised during the years ended December 31, 2024 and 2023 was nil and $ 0.5 million , respectively.
The total fair value of options vested during the years ended December 31, 2024 and 2023 was $ 22.6 million and $ 24.4 million , respectively.
During the year ended December 31, 2024 , an aggregate of 8,612 options were exercised at a weighted-average exercise price of $ 1.99 per share, for aggregate proceeds of $ 0.02 million. As a result, an amount of $ 0.01 million previously included in additional paid-in-capital related to the exercised options has been credited to c ommon shares and deducted from additional paid-in-capital.
Restricted Share Units
The following table summarizes the Company’s restricted share unit activity:
Number of
shares
Weighted
average
grant date fair value
Weighted
average
remaining
contractual
term
(in years)
Intrinsic value (in thousands)
Outstanding, January 1, 2024
Awarded
Vested and released
Cancelled or forfeited
Outstanding, December 31, 2024
The fair value of each restricted share unit is estimated on the date of grant based on the fair value of our common shares on that same date.
Share-Based Compensation
Share-based compensation expense for all awards was allocated as follows:
Year Ended December 31,
(in thousands)
Research and development
General and administrative
Total share-based compensation expense
Share-based compensation expense by type of award was as follows:
Year Ended December 31,
(in thousands)
Stock options
Restricted share units
ESPP
Total share-based compensation expense
As of December 31, 2024, there was $ 19.9 million and $ 4.5 million of unrecognized share-based compensation expense to be recognized over a weighted-average remaining vesting period of 1.0 years and 1.6 years related to unvested stock options and unvested restricted share units, respectively.
13. Employee Savings Plan
The Company offers its employees in the United States the ability to participate in a 401(k) savings plan and offers its employees in Canada the ability to participate in a registered retirement savings plan. The Company makes non-matching employer contributions into both of these plans on behalf of participants equal to 3 % of their base salary. The Company has recorded an expense of $ 0.8 million and $ 0.9 million in matching contributions for the years ended December 31, 2024 and 2023 .
14. Collaboration Arrangements
Debiopharm Clinical Study and Collaboration Agreement
In January 2024, the Company entered into a clinical study and collaboration agreement with Debiopharm International S.A. (“Debiopharm”), a privately-owned, Swiss-based biopharmaceutical company, with the aim to explore the synergy between the Company’s compound, lunresertib, and Debiopharm’s compound, Debio 0123, a WEE1 inhibitor (the “Debio Collaboration Agreement”). The Company and Debiopharm are collaborating on the development of a combination therapy, with the Company sponsoring the global study, and will share all costs equally. The Company and Debiopharm are each supplying their respective drugs and retain all commercial rights to their respective compounds, including as monotherapy or as combination therapies. The activities associated with the Debio Collaboration Agreement are coordinated by a joint steering committee, which is comprised of an equal number of representatives from the Company and Debiopharm.
Based on the terms of the Debio Collaboration Agreement, the Company concluded that the Debio Collaboration Agreement meets the requirements of a collaboration within the guidance of ASC 808, Collaborative Arrangements, as both parties are active participants in the combination trial and are exposed to significant risks and rewards depending on the success of the combination trial. Accordingly, the net costs associated with the co-development are expensed as incurred and recognized within research and development expenses in the condensed consolidated statement of operations and comprehensive loss.
During the year ended December 31, 2024, the Company recognized $ 3.2 million ( nil - 2023), in net research and development costs with regards to the Debiopharm portion of the 50/50 cost sharing terms in the Debio Collaboration Agreement.
15. Revenue recognition from Collaboration and License Agreements
The following table presents revenue from collaboration agreements:
December 31,
(in thousands)
Roche Collaboration and License Agreement
Bristol-Myers Squibb Collaboration and License Agreement
Ono Collaboration Agreement
Total revenue
Roche
In June 2022, the Company entered into a collaboration and license agreement (the “Roche Agreement”) with Hoffmann-La Roche Inc. and F. Hoffmann-La Roche Ltd (collectively, “Roche”) regarding the development and commercialization of the Company’s product candidate camonsertib (also known as RP-3500) and specified other Ataxia-Telangiectasia and Rad3-related protein kinase (“ATR”) inhibitors (the “Licensed Products”). Pursuant to the Roche Agreement, the Company granted Roche a worldwide, perpetual, exclusive, sublicensable license to develop, manufacture, and commercialize the Licensed Products, as well as a non-exclusive, sublicensable license to certain related companion diagnostics. The Company agreed to complete specified ongoing clinical trials in accordance with the development plan in the Roche Agreement, as well as ongoing investigator sponsored trials (together, the “Continuing Trials”) at the Company’s expense. Roche assumed all subsequent development of camonsertib with the potential to expand development into additional tumors and multiple combination studies. The Company retained the right to conduct specified clinical trials (the “Repare Trials”) of camonsertib in combination with the Company’s PKMYT1 compound (also known as lunresertib).
The Company assessed the Roche Agreement in accordance with ASC 606, Revenue from Contracts with Customers , and concluded that Roche is a customer within the context of the agreement. At inception, the Company identified several performance obligations under the agreement, being (i) the combination of the exclusive perpetual license to the Licensed Products and the non-exclusive license to certain companion diagnostics, (ii) the research and development activities related to the completion of the Continuing Trials, as well as (iii) the transfer of clinical trial materials on hand. The Company determined that the exclusive license to the Licensed Products and the non-exclusive license to certain companion diagnostics should be combined into one distinct performance obligation as they were not capable of being distinct from each other within the context of the agreement given both are highly interdependent of each other. The Company determined that the combined licenses, the completion of the Continuing Trials and the
transfer of clinical trial materials were all capable of being distinct and were distinct within the context of the Roche Agreement given such activities are independent of each other and Roche could benefit from either separately.
The Company determined that the transaction price at the onset of the agreement was $ 134.6 million, being (i) the total non-refundable upfront payment received of $ 125.0 million, (ii) the additional $ 4.0 million payment received, negotiated with Roche for revisions to the clinical development plan under the Roche Agreement as agreed at the time of the effective date of the Roche Agreement, and (iii) the $ 5.6 million received for the transfer of clinical trial materials. Additional consideration was to be paid to the Company upon the achievement of multiple clinical, regulatory and sales milestones. The Company utilized the most likely method approach and concluded that these amounts were constrained based on the probability of achievement. As such, the Company excluded such additional consideration from the transaction price.
The Company allocated the transaction price at the onset of the agreement of $ 134.6 million to each performance obligation based on the relative stand-alone selling price of each performance obligation at inception. The Company determined the estimated stand-alone selling price at contract inception of the combined licenses by applying a probability adjusted discounted cashflow model which forecasts future cash flows related to the licenses. The Company considered applicable market conditions and relevant entity-specific factors, including those factors contemplated in negotiating the agreement, probability of success, discount rate and the time needed to commercialize a product pursuant to the license. The Company determined the estimated stand-alone selling price at contract inception of the research and development activities required to complete the Continuing Trials based on internal estimates of the costs to perform the services, inclusive of a reasonable profit margin. Significant inputs used to determine the total costs to complete the Continuing Trials included the length of time required, the internal hours as well as external costs expected to be incurred, the number of patients and the number of clinical and investigator sponsored trials. The Company determined the stand-alone selling price of the clinical trial materials transferred based on the purchase price from external vendors, without applying a markup as the materials have a built-in margin from the external vendors.
In February 2023, the Company received an additional payment of $ 4.0 million negotiated with Roche for additional revisions to the clinical development plan. In March 2024, the Company received a further payment of $ 4.0 million for revisions to the clinical development plan under the Roche Agreement, of which $ 2.1 million was previously recorded as a receivable at December 31, 2023. The Company determined that the scope and the price of the contract had increased as a result of these additional changes and thus reflected a contract modification under ASC 606. The additional services were assessed to be not distinct from the ongoing performance obligation related to the completion of the Continuing Trials but distinct from the other performance obligations. The transaction price was updated for the additional consideration received of $ 8.0 million, as well as other adjustments of $ 0.5 million pursuant to the termination of the agreement, which were fully allocated to the completion of the Continuing Trials performance obligation.
Based on the relative stand-alone selling price, the allocation of the transaction price to the separate performance obligations is as follows:
Performance obligation
Transaction price
(in thousands)
Combined licenses
Completion of Continuing Trials
Transfer of clinical trial materials
Total transaction price
Revenue associated with the combined licenses was recognized at a point in time upon the transfer of the licenses to Roche on the effective date of the Roche Agreement as the Company concluded that the combined licenses were a functional intellectual property license that Roche could benefit from as of the time of grant. Revenue associated with the transfer of clinical trial materials was recognized at a point in time upon delivery of the clinical trial materials to Roche in the year ended December 31, 2022. Revenue associated with the completion of the Continuing Trials was deferred, to be recognized on a proportional performance basis over the period of time to complete the Continuing Trials, using input-based measurements of total costs of research and development incurred to estimate the proportion performed. Progress towards completion is remeasured at the end of each reporting period.
Deferred revenue pertaining to the Roche Agreement
Completion of Continuing Trials
(in thousands)
Balance as of December 31, 2023
Increase in collaboration revenue receivable
Recognition as revenue, as the result of performance obligations satisfied
Balance as of December 31, 2024
The Company recognized $ 14.5 million for the year ended December 31, 2023 as revenue associated with the Roche Agreement, in recognition of deferred revenue for research and development services performed towards the completion of the Continuing Trials during the period. As of December 31, 2023, there was $ 9.4 million of deferred revenue related to the Roche Agreement, of which $ 7.7 million was classified as current and $ 1.7 million was classified as non-current in the consolidated balance sheet based on the period the services to complete the Continuing Trials were expected to be performed.
In February 2024, the Company received a $ 40 million milestone payment from Roche upon dosing of the first patient with camonsertib in Roche's Phase 2 TAPISTRY trial.
The Company recognized $ 50.9 million as revenue for the year ended December 31, 2024 in relation to (i) the recognition of revenue from the $ 40.0 million milestone achievement in the first quarter of 2024, as well as (ii) the recognition of all remaining deferred revenue for research and development services performed towards the completion of the Continuing Trials during the period. As of December 31, 2024 , there was nil deferred revenue related to the Roche Agreement.
Over the course of the Roche camonsertib collaboration, the Company received a cumulative total of $ 182.6 million, including the upfront payment, the milestone payment, as well as additional reimbursements from Roche. On February 7, 2024, the Company received written notice from Roche of their election to terminate the Roche collaboration agreement following a review of Roche's pipeline and evolving external factors. The termination became effective May 7, 2024, at which time the Company regained global development and commercialization rights for camonsertib from Roche. Following May 7, 2024, there is no other material relationship between the Company and Roche.
Bristol-Myers Squibb
In May 2020, the Company entered into a collaboration and license agreement (the “BMS Agreement”) with Bristol-Myers Squibb Company (Bristol-Myers Squibb), pursuant to which the Company and Bristol-Myers Squibb agreed to collaborate in the research and development of potential new product candidates for the treatment of cancer. The Company provided Bristol-Myers Squibb access to a selected number of its existing screening campaigns and novel campaigns. The Company was responsible for carrying out early-stage research activities directed to identifying potential targets for potential licensing by Bristol-Myers Squibb, in accordance with a mutually agreed upon research plan and was solely responsible for such costs. The collaboration consists of programs directed to both druggable targets and to targets commonly considered undruggable to traditional small molecule approaches. Upon Bristol-Myers Squibb’s election to exercise its option to obtain exclusive worldwide licenses for the subsequent development, manufacturing and commercialization of a program, Bristol-Myers Squibb will then be solely responsible for all such worldwide activities and costs.
The collaboration term expired in November 2023, being 42 months after the effective date of the BMS Agreement. The BMS Agreement will expire, assuming that Bristol-Myers Squibb has exercised at least one option for a program, on a licensed product-by-licensed product and country-by-country basis on expiration of the applicable royalty term and in its entirety upon expiration of the last royalty term. Either party may terminate earlier upon an uncured material breach of the agreement by the other party, or the insolvency of the other party. Additionally, Bristol-Myers Squibb may terminate the BMS Agreement for any or no reason on a program-by-program basis upon specified written notice.
Under the terms of the BMS Agreement, Bristol-Myers Squibb paid the Company an initial non-refundable upfront fee payment of $ 50.0 million in June 2020. The Company is entitled to receive, on a program-by-program basis, option exercise fees ranging in the low six figures depending on the nature of the applicable program. Bristol-Myers Squibb
also has the right to retain rights to certain back-up programs in exchange for a one-time payment in the low eight figures per program. The Company is also entitled to receive up to $ 301.0 million in total milestones on a program-by-program basis, consisting of $ 176.0 million in the aggregate for certain specified research, development and regulatory milestones and $ 125.0 million in the aggregate for certain specified commercial milestones. The Company is further entitled to a tiered percentage royalty on annual net sales ranging from high-single digits to low-double digits, subject to certain specified reductions. Royalties are payable by Bristol-Myers Squibb on a licensed product-by-licensed product and country-by-country basis until the later of the expiration of the last valid claim covering the licensed product in such country, expiration of all applicable regulatory exclusivities in such country for such licensed product and the tenth anniversary of the first commercial sale of such licensed product in such country.
On a program-by-program basis, prior to the earlier of such program ceasing to be included under the BMS Agreement and expiration of the last to expire royalty term for such program, the Company, alone and with third parties, is prohibited from researching, developing, manufacturing and commercializing products that are directed to the applicable target for such program.
The Company provided Bristol-Myers Squibb with certain, limited rights to first negotiation if the Company determines to divest, license or collaborate with others regarding certain existing programs, including in the event that the Company receives an unsolicited offer to do so. The right of first negotiation expressly excludes any potential change of control transaction, as defined in the agreement.
The Company assessed the BMS Agreement in accordance with ASC 606, Revenue from Contracts with Customers, and concluded that Bristol-Myers Squibb is a customer based on the agreement structure. At inception, the Company identified several performance obligations under the BMS Agreement, being (i) research activities for each campaign over the collaboration term, as well as (ii) a selected number of material rights associated with options to obtain exclusive development, manufacturing, and commercial licenses to targets identified. The Company determined that the options to obtain the exclusive development, manufacturing and commercialization licenses were material rights under ASC 606 because there are minimal amounts to be paid to the Company upon exercise of such options.
The Company determined that the transaction price at the onset of the BMS Agreement was the total non-refundable upfront payment received of $ 50.0 million. Additional consideration was to be paid to the Company upon the exercise of options to license targets and future milestone payments. The Company utilized the most likely method approach and concluded that these amounts were constrained as they represent option fees and milestone payments that can only be achieved subsequent to option exercises. As such, the Company excluded this additional consideration from the transaction price.
The Company allocated the transaction price of $ 50.0 million to each performance obligation based on the relative stand-alone selling price of each performance obligation at inception, which was determined based on each performance obligation’s estimated stand-alone selling price. The Company determined the estimated stand-alone selling price at contract inception of the research activities based on internal estimates of the costs to perform the services, inclusive of a reasonable profit margin. Significant inputs used to determine the total costs to perform the research activities included the length of time required, the internal hours expected to be incurred on the services and the number and costs of various studies that will be performed to complete the research plan. The Company determined the estimated stand-alone selling price at contract inception of the material rights associated with options to obtain exclusive licenses to druggable targets and undruggable targets based on the fees Bristol-Myers Squibb would pay to exercise these options, the probability-weighted value of expected future cash flows associated with each license related to each target and the probability that these options would be exercised by Bristol-Myers Squibb. In developing such estimates, the Company also considered applicable market conditions and relevant entity-specific factors, including those factors contemplated in negotiating the agreement, probability of success and the time needed to commercialize a product candidate pursuant to the associated licens e. Based on the relative stand-alone selling price, the allocation of the transaction price to the separate performance obligations was as follows:
Performance obligation
Transaction price
(in thousands)
Research activities
Options to license druggable targets
Options to license undruggable targets
Total transaction price
Revenue associated with the options was deferred and recognized at the point in time when options to license are exercised by Bristol-Myers Squibb or upon expiry of such options. Revenue associated with the research activities was deferred and recognized on a proportional performance basis over the period of service for research activities, being the collaboration term, using input-based measurements of total costs of research incurred to estimated proportion performed. Progress towards completion is remeasured at the end of each reporting period.
Deferred revenue pertaining to the BMS Agreement
Research activities
Options to license druggable targets
Options to license undruggable targets
Total
(in thousands)
Balance as of December 31, 2023
Increase in collaboration revenue receivable
Recognition as revenue, as the result of performance
obligations satisfied
Balance as of December 31, 2024
The Company recognized nil as revenue for the year ended December 31, 2024 and $ 2.4 million for the year ended December 31, 2023, in recognition of deferred revenue for research activities performed under the BMS Agreement.
In fiscal 2023, Bristol-Myers Squibb exercised its option for a druggable target and also waived its right to exercise an option for another druggable target. As a result, the Company recognized $ 12.7 million as revenue related to druggable targets for the year ended December 31, 2023 , including the option fee payment of $ 0.25 million. Bristol-Myers Squibb also triggered a $ 1.0 million further development election for a previously exercised druggable target. As such, the Company recognized $ 1.0 million for this specified research milestone as revenue for the year ended December 31, 2023.
The Company completed the discovery portion of the BMS Agreement in November 2023. With the completion of its performance obligations under the BMS Agreement in the fourth quarter of 2023, the Company recognized $ 10.0 million as revenue for the year ended December 31, 2023 related to options to license undruggable targets as these options expired upon completion of the discovery portion of the BMS Agreement.
In March 2024, Bristol-Myers Squibb exercised its one remaining option for an undruggable target. As a result, the Company recognized $ 2.6 million as revenue related to undruggable targets, including the option fee payment of $ 0.1 million, for the year ended December 31, 2024.
As of December 31, 2024 , there was nil ( December 31, 2023 - $ 2.5 million ) of deferred revenue related to the BMS Agreement, of which nil ( December 31, 2023 - $ 2.5 million ) was classified as current on the consolidated balance sheet based on the period the services are expected to be performed and the expected timing of potential option exercises.
Ono
In January 2019, the Company entered into a research services, license and collaboration agreement (the “Ono Agreement”) with Ono Pharmaceutical Company, Ltd. (“Ono”), pursuant to which the Company and Ono agreed to collaborate in the research of potential product candidates targeting Polθ and the development of the Company’s small molecule Polθ ATPase inhibitor program. The Company was primarily responsible for carrying out research activities to identify a product candidate, to be licensed to Ono, in accordance with a mutually agreed upon research plan during a research term that will end upon the earlier of the date of the first submission of an Investigational New Drug
application (“IND”) in the United States or Japan, or the end of the research term. In the event that Ono elected to collaborate on the subsequent development and commercialization of the proposed product candidate, Ono would then have been responsible for such activities in Japan, South Korea, Taiwan, Hong-Kong, Macau and the Association of Southeast Asian Nations (collectively, the “Ono territory”), and the Company would have been responsible for all such activities in the rest of the world outside the Ono territory, including the United States, Canada and European Union. In such instance, Ono would have been responsible for a specified percentage of research and developments costs for the IND-enabling studies of the selected product candidate.
In October 2021, the Company and Ono entered into an amendment to the Ono Agreement whereby the Research Term, as defined in the Ono Agreement, was extended by one year . In January 2023, the Company and Ono entered into a second amendment to the Ono Agreement whereby the Research Term, as defined in the Ono Agreement, was extended until July 31, 2023.
Under the terms of the Ono Agreement, the Company received non-refundable upfront payments of ¥ 900 million ($ 8.1 million), consisting of an initial upfront fee payment of ¥ 110 million ($ 1.0 million) and an initial upfront research service payment of ¥ 790 million ($ 7.1 million).
The Company assessed the arrangement in accordance with ASC 606 and concluded that Ono is a customer based on the arrangement structure. The Company identified a single performance obligation under the arrangement consisting of the combination of the license to develop and commercialize a selected product candidate targeting Polθ and associated research services.
The Company determined that the license and research services are not distinct within the context of the contract, and the license is the predominant good or service. Accordingly, revenue is recognized in accordance with guidance for licenses, and because the license represents functional IP, it is recognized at the point in time control of the license is transferred.
The Company determined that the transaction price at the onset of the arrangement is the total upfront payments received in the aggregate amount of $ 8.1 million which was recorded as deferred revenue. The future milestone payments represent variable consideration that is fully constrained at inception of the arrangement as the achievement of the milestone events are highly uncertain. In October 2021 and December 2022, the Company achieved specified research triggers amounting to ¥ 100 million ($ 0.9 million) and ¥ 200 million ($ 1.5 million), respectively, as research service payments provided for in the Ono Agreement. The ¥ 200 million ($ 1.5 million) is included in the collaboration revenue receivable at December 31, 2022 and was subsequently received in January 2023.
In June 2023, the Company and Ono determined not to further extend the Term of the Ono Agreement. As a result, no product candidate was licensed to Ono pursuant to the terms of agreement. The Company recognized as revenue nil for the year ended December 31, 2024 ($ 10.5 million for the year ended December 31, 2023 ) with regards to the performance obligation under the Ono Agreement. In July 2023, Ono provided the Company with a formal notice to terminate the Ono Agreement without cause as defined in the Ono Agreement. As a result of this termination, all rights to the Polθ program have reverted to the Company.
16. Income Taxes
Loss before the provision for income taxes consisted of the following:
Year Ended December 31,
(in thousands)
Canada
Foreign
Loss before provision for income taxes
The components of the provision for income taxes are as follows:
Year Ended December 31,
(in thousands)
Current income tax provision (benefit) - foreign
Deferred income tax - foreign
Total provision (benefit) for income taxes
A reconciliation between tax expense and the product of accounting income multiplied by the statutory income tax rate is as follows:
Year Ended December 31,
(in thousands)
Loss before income taxes
Income tax at statutory rate
Computed income tax recovery
Effect on income tax resulting from:
Federal investment tax credit
Accounting charges not deductible for tax purposes
Capital gain income
Equity compensation
State taxes
Other
Change in valuation allowance
Tax (benefit) expense
The Company’s applicable statutory tax rate is the Canadian combined rate applicable in the jurisdictions in which the Company operates.
Income tax receivable in the amount of $ 11.6 million as of December 31, 2024 reflects the overpayment of tax installments by the Company’s U.S. subsidiary, which resulted from its compliance with the requirement to capitalize and amortize certain specified research and experimental expenditures subject to Section 174 of the Internal Revenue Code of 1986, as amended (“IRC”) (as per the Tax Cuts and Jobs Act of 2017), prior to the issuance of interim guidance on September 8, 2023 by the Department of Treasury and the Internal Revenue Service on IRC Section 174 that supports the deduction of certain expenses that would otherwise be treated as specified research and experimental expenditures. The current portion of the income tax receivable is approximately $ 10.6 million, which primarily consists of an overpayment of tax installments by the Company’s U.S. subsidiary for the 2022 fiscal year, and the long-term portion is approximately $ 1.0 million.
As of December 31, 2024, the Company had Federal and Quebec tax losses of approximately $ 352.2 million and $ 346.5 million respectively , which are available to offset future taxable income in Canada. The Company has not recognized the tax benefit of these losses. These losses expire as follows:
Federal
Quebec
(in thousands)
Total
As of December 31, 2024, the Company had Scientific Research and Experimental Development (“SR&ED”) expenditures of approximately $ 83.1 million for Canadian federal and $ 88.1 million for Quebec purposes, which have not been deducted. These expenditures are available to reduce future taxable income and have an unlimited carryforward period. SR&ED expenditures are subject to verification by the tax authorities and, accordingly, the amounts may vary.
As of December 31, 2024, the Company had non-refundable Canadian federal investment tax credits of approximately $ 13.8 million , which may be utilized to reduce Canadian federal income taxes payable. The Company has not recognized the tax benefits related to the non-refundable investment tax credits. The investment tax credits expire as follows:
(in thousands)
Total
The Company’s deferred tax assets as of December 31, 2024 and 2023 consisted of the following:
(in thousands)
Net operating loss carryforwards
Net research and development expenditures
Share issuance costs
Net federal investment tax credits
U.S. research and development tax credits
Tax basis of property and equipment in excess of carrying values
Operating lease right-of-use assets
Operating lease liability
Accrued expense and other liabilities
Deferred revenue
Share-based compensation
Total deferred tax assets
Valuation allowance
Net deferred tax assets
Management has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets and has determined that it is more likely than not that the Company will not recognize the benefit of its net deferred tax assets, and as a result, a valuation allowance of $ 139.8 million and $ 111.6 million has been established at December 31, 2024 and December 31, 2023, respectively.
The Company has incurred net operating losses in Canada since inception and the Company’s U.S. subsidiary operated profitably in the United States since its inception. As of December 31, 2024, the Company had U.S. federal and state research and development tax credit carry forwards o f $ 7.2 million.
The Company files income tax returns in Canada and in the United States. In the normal course of business, the Company could be subject to examination by federal and provincial or state jurisdictions, where applicable. The Company is currently under audit in Canada for tax years 2022-2023 and in Quebec for tax years 2021-2023. The Company may be subject to tax examination for fiscal years 2016 to 2024 due to unexpired statute of limitation periods.
The calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations for both federal taxes and the provinces and states in which the Company operates or does business in. ASC 740 states that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits.
The Company records uncertain tax positions as liabilities in accordance with ASC 740 and adjusts these liabilities when the Company’s judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of the unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available. As of December 31, 2024 and 2023 , no uncertain tax positions have been recorded in the consolidated financial statements.
The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of operations and comprehensive loss. As of December 31, 2024 and 2023 , no accrued interest or penalties are included on the related tax liability line in the consolidated balance sheet.
17. Net Loss per Share
The following table summarizes the computation of basic and diluted net loss per share attributable to common shareholders of the Company:
Year Ended December 31,
(in thousands, except share and per share data)
Numerator:
Net loss
Denominator:
Weighted-average number of common shares outstanding—basic and
diluted
Net loss per share—basic and diluted
The Company’s potentially dilutive securities, which include options to purchase common shares, restricted share units, and shares issuable under the ESPP, have been excluded from the computation of diluted net loss per share attributable to common shareholders as the effect would be to reduce the net loss per share attributable to common shareholders. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common shareholders is the same.
The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common shareholders for the periods indicated because including them would have had an anti-dilutive effect:
Year Ended December 31,
Options to purchase common shares
Restricted share units
Estimated shares issuable under the ESPP
18. Government Assistance
The Company incurred research and development expenditures which are eligible for refundable investment tax credits. The refundable investment tax credits recorded are based on management’s estimates of amounts expected to be recovered and are subject to audit by the taxation authorities. These amounts have been recorded as a reduction of research and development expenditures in the amounts of $ 0.9 million , and $ 1.5 million for the years ended December 31, 2024 and 2023 , respectively.
19. Commitments and Contingencies
The following table summarizes the Company’s commitments to settle contractual obligations at December 31, 2024, other than leases which are recognized as operating lease liabilities in the consolidated balance sheet.
Year Ending December 31,
(in thousands)
Following years
Total
The commitment amounts in the table above are associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the actions under the contracts.
Collaboration and Research Agreements
Collaboration and research agreement obligations primarily relate to a strategic collaboration agreement that was entered into with the University of Texas M. D. Anderson Cancer Center (“MDACC”) in March 2020. The collaboration consists of preclinical studies and clinical trials designed by the Company and MDACC with the research to be completed by MDACC. The Company agreed to commit $ 10.0 million in funding for various studies over a period of five years , which has been fully paid as of December 31, 2024.
The Company entered into an agreement with the Broad Institute, Inc. (“Broad”), in July 2022, under which Broad will perform specialty screening services at the Company’s request over the course of a three-year term in exchange for payments of $ 0.8 million per year, beginning in July 2022, totaling $ 2.3 million in the aggregate, which has been fully paid as of December 31, 2024.
Purchase and Other Obligations
In the normal course of business, the Company enters into contracts with Contract Research Organizations (“CROs”) and other third parties for preclinical studies and clinical trials, research and development supplies and other testing and manufacturing services. These contracts generally do not contain minimum purchase commitments and provide for termination on 30 to 90 days’ prior written notice, and therefore are cancellable contracts. These payments are not included in the table above as the amount and timing of such payments are not known as of December 31, 2024.
In the normal course of business, the Company enters into non-cancellable purchase obligations for services and subscriptions in support of its activities. As of December 31, 2024, future estimated payments under such obligations are $ 1.2 million for the fiscal year 2025 and $ 0.1 million for the fiscal year 2026, which are included in the table above.
The Company has further entered into license agreements under which it is obligated to make milestone and royalty payments and incur annual maintenance fees. The future milestone or royalty payments under these agreements have not been included in the table above since the payment obligations are contingent upon future events, such as achieving certain clinical and commercial milestones or generating product sales. As of December 31, 2024, the Company is unable to estimate the timing or likelihood of achieving these clinical and commercial milestones or generating future product sales (see Note 9).
Indemnification Agreements
In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its board of directors and executive officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company is not aware of any indemnification arrangements that could have a material effect on its financial position, results of operations or cash flows, and it has not accrued any liabilities related to such obligations in these consolidated financial statements as at December 31, 2024 .
20. Currency Risk
The Company is exposed to the financial risk related to the fluctuation of foreign exchange rates and the degree of volatility of those rates. The foreign currency risk is limited to the portion of the Company’s business transactions denominated in currency other than U.S. dollars.
The Company incurs a portion of its expenses in Canadian dollars, as well as other currencies to a lesser extent. A change in the currency exchange rates between the U.S. dollars relative to the Canadian dollar could have a significant effect on the Company’s consolidated results of operations, financial position, or cash flows. The Company does not enter into arrangements to hedge its currency risk exposure, although it maintains expected Canadian dollar cash requirements in Canadian dollars to form a natural hedge.
The Company is exposed to currency risk through its cash, other current receivables, accounts payable, accrued expenses and other current liabilities, as well as right-of-use lease liabilities denominated in Canadian dollars as follows:
December 31,
(in thousands)
Cash
Other current receivables
Accounts payable
Accrued expenses and other current liabilities
Lease liabilities
Net financial position exposure
Based on the above net exposure at December 31, 2024 , and assuming that all other variables remain constant, a 10 % depreciation of the U.S. dollar against the Canadian dollar would result in an increase of $ 0.1 million in the Company’s net loss for the year ended December 31, 2024 .
21. Segment Information
The Company operates and manages its business as a single reporting and operating segment, which is the research and development of precision oncology drugs targeting specific vulnerabilities of tumors in genetically defined patient populations. The Company's CODM is the Chief Executive Officer . The CODM assesses performance for the segment and decides how to allocate resources based on consolidated net loss that is reported on the consolidated statement of operations and comprehensive loss. Managing and allocating resources on a consolidated basis enables to CODM to assess the overall level of resources available and how to be deploy these resources across functions and programs that are in line with the Company's long-term company-wide strategic goals.
The following table presents reportable segment net loss, including significant expense categories, attributable to the Company's reportable segment for the years ended December 31, 2024 and 2023.
December 31,
(in thousands)
Revenue:
Collaboration agreements
Operating expenses:
Discovery costs
Direct external costs
Laboratory supplies and research materials
Personnel related costs
Facilities related costs
Other costs
Development costs
Direct external costs
Camonsertib program
Lunresertib program
RP-1664 program
RP-3467 and Polθ program
Personnel related costs
Facilities related costs
Other costs
Debiopharm development cost reimbursement
R&D tax credits
Total research and development costs
Personnel related costs
Other general administrative costs (1)
Total general and administrative costs
Restructuring costs
Loss from operations
Other income, net (2)
Income tax (expense) benefit
Net Loss
(1) Includes professional fees, directors and officers insurance costs, public company operating costs, information technology related costs, and other administrative costs.
(2) Includes interest income and other expenses.
The following presents segment revenue and long lived assets by geographic location, along with major collaborator information.
Revenue by location is as follows:
December 31,
(in thousands)
Switzerland
United States
Japan
Total revenue
The Company’s property and equipment, net by country of domicile (Canada) and its subsidiary in the United States are as follows:
December 31,
(in thousands)
Canada
United States
Total property and equipment, net
The Company’s right-of-use assets by country of domicile (Canada) and its subsidiary in the United States are as follows:
December 31,
(in thousands)
Canada
United States
Total right-of-use assets, net
Major Customers
The Company had one customer (a major collaborator) that represents more than 10 % of total revenue. The amount of revenue derived from this customer for the year ended December 31, 2024, was $ 50.9 million .
22. Subsequent Events
On January 9, 2025, the Company announced a re-alignment of resources and a re-prioritization of its clinical portfolio to focus on the continued advancement of its Phase 1 clinical programs, RP-3467 and RP-1664. The Company also announced its intention to seek partnering opportunities across its portfolio, including lunresertib and camonsertib prior to the start of any pivotal development. Effective February 24, 2025, the Company implemented a reduction of its workforce by approximately 75 % to extend its cash runway into late-2027. The Company estimates that it will incur approximately $ 8.7 million for retention, severance and other employee termination-related costs through the fourth quarter of 2025.
