Sierra Oncology Reports Second Quarter 2020 Results

- MOMENTUM Phase 3 clinical trial enrollment on track; top-line data anticipated in H1 2022 -
- Updated analyses comparing symptomatic benefits of momelotinib to ruxolitinib from the SIMPLIFY-1 Phase 3 trial anticipated in late 2020 -

VANCOUVER, BC, Aug. 6, 2020 /PRNewswire/ - Sierra Oncology, Inc. (SRRA), a late-stage drug development company focused on the registration and commercialization of momelotinib, a JAK1, JAK2 & ACVR1 inhibitor with a potentially differentiated therapeutic profile for the treatment of myelofibrosis, today reported its financial and operational results for the second quarter ended June 30, 2020.

"We believe momelotinib, if approved, may provide an important treatment option for underserved myelofibrosis patients, in particular those with anemia and thrombocytopenia, and as such is well-positioned to generate significant value," said Dr. Stephen Dilly, President and CEO of Sierra Oncology. "During the second quarter, we continued to advance the MOMENTUM Phase 3 trial and are on track to deliver top-line results in the first half of 2022. In anticipation of these pivotal data, we are preparing for the regulatory submission process and the potential commercialization of momelotinib, and subsequent to the end of the quarter, we substantially strengthened our senior management team to support these activities."

"We made significant progress during the first half of 2020 operationalizing the global MOMENTUM Phase 3 trial and, while the potential impact of the COVID-19 pandemic continues to be uncertain, we are pleased with the current pace of enrollment," said Dr. Barbara Klencke, Chief Development Officer, Sierra Oncology. "During the EHA virtual conference, two world-leading physicians in the treatment of myelofibrosis reported long-term data that continue to reinforce momelotinib's differentiated durability, safety and efficacy profile. We plan to report updated analyses in late 2020 comparing the symptomatic benefits of momelotinib to ruxolitinib from the SIMPLIFY-1 Phase 3 trial that will further emphasize momelotinib's differentiated and competitive profile."

"As the MOMENTUM trial ramps up, we've managed our resources prudently and continue to anticipate our current cash runway will extend beyond top-line data and into the second half of 2022, subject to the potential impact of COVID-19," said Mr. Sukhi Jagpal, Chief Financial Officer of Sierra Oncology. "In addition, our Series B warrants will expire on the 75th day following the announcement of top-line data and may only be exercised by paying the exercise price in cash, which would amount to approximately $34.0 million in proceeds to the Company if fully exercised. We are also starting to explore non-dilutive options that could provide additional capital to support our North American commercialization strategy."

Second Quarter Highlights:

    --  Hosted an Analyst & Investor Call featuring a presentation by renowned
        myelofibrosis expert Dr. Ruben Mesa, Director of the Mays Cancer Center,
        home to UT Health San Antonio MD Anderson Cancer Center, who discussed
        momelotinib's ability to address anemia and transfusion dependency, two
        critical unmet medical needs in treating patients with myelofibrosis.
    --  Reported favorable Long-Term Safety and Dose Intensity data for
        momelotinib from more than 550 patients across the two previously
        conducted SIMPLIFY Phase 3 studies and their subsequent ongoing extended
        treatment periods, at the 25(th) EHA Virtual Congress.
        --  Professor Claire Harrison, Guy's and St. Thomas' NHS Foundation
            Trust, London, United Kingdom presented a poster on the long-term
            safety profile of momelotinib, which demonstrated a lack of emergent
            or cumulative toxicity with extended daily administration. More than
            90 SIMPLIFY-1 and SIMPLIFY-2 patients continued to receive
            momelotinib for 3.5 years or longer. Patients treated with
            momelotinib experienced rapid and sustained increases in hemoglobin,
            in contrast to the significant decrease in hemoglobin for patients
            receiving ruxolitinib. Patients treated with momelotinib also
            experienced significantly higher mean platelet counts compared to
            those receiving ruxolitinib. Importantly, patients who switched from
            ruxolitinib to momelotinib also achieved a sustained improvement in
            hemoglobin in both studies, and platelets in SIMPLIFY-1.
        --  Dr. Vikas Gupta, Princess Margaret Cancer Centre, Toronto, Canada,
            presented a poster highlighting the sustained dose intensity and
            prolonged clinical activity of momelotinib across the continuum of
            JAK inhibitor naïve and previously JAK inhibitor treated
            myelofibrosis patients. While the starting doses for ruxolitinib
            were often attenuated due to low platelets, further reductions in
            dose intensity were also commonly required for ruxolitinib. In
            contrast, momelotinib was initiated at full dose for all patients
            enrolled to the SIMPLIFY studies and high dose intensity was
            maintained in the majority over extended dosing durations. Patients
            who switched from ruxolitinib to momelotinib saw an immediate and
            sustained improvement in dose intensity.
        --  The data from the two interrelated presentations suggest that the
            favorable effect on hemoglobin and platelets allows momelotinib to
            be initiated at high dose intensity and maintained at high dose
            intensity over extended durations while retaining a favorable
            long-term safety profile. Notably, some patients continue to receive
            momelotinib 10 years after enrolling in the initial momelotinib
            Phase 2 trials, while 90 Phase 3 SIMPLIFY patients who enrolled into
            those trials 4 to 6 years ago continue to receive momelotinib,
            suggesting that the dosing and safety profile contributes to
            momelotinib's potential ability to provide sustained benefits over
            extended durations.

Second Quarter 2020 Financial Results (all amounts reported in U.S. currency)
Research and development expenses were $10.2 million for the three months ended June 30, 2020 compared to $11.7 million for the three months ended June 30, 2019. The decrease was primarily due to a $2.1 million decrease in clinical trial, third-party manufacturing, research and preclinical costs for SRA737, a $1.1 million decrease in personnel-related and allocated overhead costs, and a $0.9 million decrease in third-party manufacturing costs for momelotinib. These decreases were partially offset by a $2.6 million increase in clinical trial and development costs for momelotinib. Research and development expenses included non-cash stock-based compensation of $0.9 million and $1.2 million for the three months ended June 30, 2020 and 2019, respectively.

Research and development expenses were $21.8 million for the six months ended June 30, 2020, compared with $21.9 million for the six months ended June 30, 2019. The decrease was primarily due to a $5.2 million decrease in clinical trial, third-party manufacturing, research and preclinical costs for SRA737, a $2.1 million decrease in personnel-related and allocated overhead costs, and a $0.6 million decrease in third-party manufacturing costs for momelotinib. These decreases were offset by a $6.3 million increase in clinical trial and development costs for momelotinib, and a non-cash charge of $1.5 million pertaining to the change in fair value of an obligation to issue common stock and a warrant to Gilead Sciences, Inc. (Gilead), which were issued during the first quarter of 2020. Research and development expenses included non-cash stock-based compensation of $1.5 million and $2.4 million for the six months ended June 30, 2020 and 2019, respectively.

General and administrative expenses were $6.3 million for the three months ended June 30, 2020, compared to $3.5 million for the three months ended June 30, 2019. The increase was primarily due to a non-cash $2.2 million stock-based compensation charge and a $0.6 million severance charge pertaining to an executive resignation. General and administrative expenses included non-cash stock-based compensation of $2.7 million and $0.5 million for the three months ended June 30, 2020 and 2019, respectively.

General and administrative expenses were $10.8 million for the six months ended June 30, 2020, compared to $6.8 million for the six months ended June 30, 2019. The increase was primarily due to a $3.0 million increase in personnel-related and allocated overhead costs, including a non-cash $2.2 million stock-based compensation charge noted above and $1.0 million of severance charges, offset by a decrease of $0.2 million in other personnel-related and allocated overhead costs. There was also an increase of $1.0 million in professional fees, including pre-commercial planning costs for momelotinib. General and administrative expenses included non-cash stock-based compensation of $3.1 million and $1.0 million for the six months ended June 30, 2020 and 2019, respectively.

Other income (expense), net was $24,000 of other expense, net for the three months ended June 30, 2020, compared to $0.3 million of other income, net for the three months ended June 30, 2019. The difference was primarily attributable to a decrease in interest income due to lower interest rates. Other income (expense), net was $15.7 million of other expense, net for the six months ended June 30, 2020, compared to $0.7 million of other income, net for the six months ended June 30, 2019. The difference was primarily attributable to a non-cash charge of $16.2 million related to the change in fair value of warrant liabilities which were reclassified to equity in January 2020.

For the three months ended June 30, 2020, Sierra incurred a GAAP net loss of $16.5 million compared to a GAAP net loss of $14.9 million for the months ended June 30, 2019. For the six months ended June 30, 2020, Sierra incurred a GAAP net loss of $48.4 million compared to a GAAP net loss of $27.9 million for the six months ended June 30, 2019. The GAAP net loss for the six months ended June 30, 2020 includes a non-cash charge of $16.2 million related to the change in fair value of warrant liabilities included in other income (expense), net and a $1.5 million non-cash charge pertaining to the obligation to issue securities to Gilead included in research and development expenses as mentioned above.

Non-GAAP adjusted net loss was $12.8 million for the three months ended June 30, 2020, compared with a non-GAAP adjusted net loss of $13.1 million for the three months ended June 30, 2019. Non-GAAP adjusted net loss for the three months ended June 30, 2020 and 2019 excludes expenses related to stock-based compensation. For the six months ended June 30, 2020, Sierra incurred a non-GAAP adjusted net loss of $26.1 million compared to a non-GAAP adjusted net loss of $24.5 million for the six months ended June 30, 2019. Non-GAAP adjusted net loss for the six months ended June 30, 2020 excludes expenses related to the change in fair value of warrant liabilities, the change in fair value of the securities issuance obligation, and stock-based compensation. Non-GAAP adjusted net loss for the six months ended June 30, 2019 excludes expenses related to stock-based compensation. See "Non-GAAP Financial Measures" and "Reconciliation of GAAP to Non-GAAP Financial Measures" below for a reconciliation of this GAAP and non-GAAP financial measure.

Cash and cash equivalents totaled $123.2 million as of June 30, 2020, compared to $147.5 million as of December 31, 2019.

As of June 30, 2020, there were 10,395,732 total shares of common stock outstanding and warrants to purchase 11,102,251 shares of common stock, with an exercise price equal to $13.20 per share. There were 2,351,055 shares issuable upon exercise of stock options and an additional warrant to purchase 1,839 shares.

About Sierra Oncology
Sierra Oncology is a late stage drug development company focused on achieving the successful registration and commercialization of momelotinib, a potent, selective and orally-bioavailable JAK1, JAK2 & ACVR1 inhibitor with a differentiated mechanism of action that enables it to potentially address all three key drivers of myelofibrosis: anemia, constitutional symptoms and enlarged spleen. Momelotinib's therapeutic profile targets the underserved myelofibrosis patient population, in particular those with anemia and thrombocytopenia. More than 1,200 subjects have received momelotinib since clinical studies began in 2009, including more than 820 patients treated for myelofibrosis.

Sierra has launched MOMENTUM, a randomized double-blind Phase 3 clinical trial designed to enroll 180 myelofibrosis patients who are symptomatic and anemic, and who have been treated previously with a JAK inhibitor. The U.S. Food and Drug Administration has granted Fast Track designation to momelotinib. Momelotinib is protected by patents anticipated to provide potential exclusivity to 2040 in the United States and Europe (inclusive of potential Patent Term Extension or Supplementary Protection Certificate).

For more information, please visit www.sierraoncology.com.

Cautionary Note on Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding Sierra Oncology's expectations from current data, anticipated clinical development activities, impact of the COVID-19 pandemic on clinical trial plans, including enrollment and site initiations, expected timing of release of further momelotinib analysis, expected timing and success of enrollment of MOMENTUM, potential benefits of momelotinib, and Sierra Oncology's capitalization and sufficiency of its capital resources. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those described in the forward-looking statements. Such forward-looking statements are subject to risks and uncertainties, including, among others, the risk that Sierra Oncology's cash resources may be insufficient to fund its current operating plans and it may be unable to raise additional capital when needed, the risk that disruptions and impacts of COVID-19 will be significant and lengthy, Sierra Oncology may be unable to successfully develop and commercialize momelotinib, momelotinib may not demonstrate safety and efficacy or otherwise produce positive results, Sierra Oncology may experience delays in the clinical development of momelotinib, Sierra Oncology may be unable to acquire additional assets to build a pipeline of additional product candidates, Sierra Oncology's third-party manufacturers may cause its supply of materials to become limited or interrupted or fail to be of satisfactory quantity or quality, Sierra Oncology may be unable to obtain and enforce intellectual property protection for its technologies and momelotinib and the other factors described under the heading "Risk Factors" set forth in Sierra Oncology's filings with the Securities and Exchange Commission from time to time. Sierra Oncology undertakes no obligation to update the forward-looking statements contained herein or to reflect events or circumstances occurring after the date hereof, other than as may be required by applicable law.

SIERRA ONCOLOGY, INC.
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands)


                                                     June 30,     December 31,
                                                         2020              2019




     
              ASSETS



     CURRENT ASSETS:


      Cash and cash equivalents                $
         123,233 $
            147,528


      Prepaid expenses and other
       current assets                                   1,392             2,369




     Total current assets                            124,625           149,897


      Property and equipment, net                          97               113


      Operating lease right-of-use
       asset                                              504               589



     Other assets                                        667               729




     TOTAL ASSETS                             $
         125,893 $
            151,328





                 LIABILITIES AND STOCKHOLDERS'
                  EQUITY



     CURRENT LIABILITIES:


      Accrued and other liabilities              $
         6,698   $
            7,170



     Accounts payable                                  1,983             1,019



     Deferred revenue                                    300



     Warrant liabilities                                               45,935


      Securities issuance obligation                                    10,485



      Total current liabilities                         8,981            64,609


      Operating lease liability                           261               374




     TOTAL LIABILITIES                                 9,242            64,983






     STOCKHOLDERS' EQUITY:





     Preferred stock                                                        1



     Common stock                                         10                74


      Additional paid-in capital                      930,702           851,957



     Accumulated deficit                           (814,061)       (765,687 )



      TOTAL STOCKHOLDERS' EQUITY                      116,651            86,345





      TOTAL LIABILITIES AND
       STOCKHOLDERS' EQUITY                    $
         125,893 $
            151,328

SIERRA ONCOLOGY, INC.
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except share and per share data)


                                                         Three Months Ended            Six Months Ended
                                                     
       June 30,                
        June 30,



                                                2020                        2019                     2020 2019






              Operating expenses:


               Research and development                  $
              10,189           $
              11,728           $
         21,780     $
          21,865


               General and administrative                             6,260                        3,479                  10,804              6,844



               Total operating expenses                              16,449                       15,207                  32,584             28,709




              Loss from operations                                (16,449)                    (15,207)               (32,584)          (28,709)


               Other income (expense), net


               Changes in fair value of warrant
                liabilities                                                                                           (16,240)


               Other income (expense), net                             (24)                         348                     517                673



               Total other income (expense),
                net                                                    (24)                         348                (15,723)               673



               Loss before provision for
                (benefit from) income taxes,
                net                                                (16,473)                    (14,859)               (48,307)          (28,036)


               Provision for (benefit from)
                income taxes, net                                      (11)                          19                      67              (126)




              Net loss                                $
              (16,462)        $
              (14,878)        $
         (48,374)   $
         (27,910)



               Net loss per common share, basic
                and diluted                              $
              (1.58)          $
              (7.97)          $
         (4.71)    $
         (14.97)



               Weighted-average shares used in
                computing net loss per common                    10,395,732                    1,867,207              10,276,180          1,864,684
    share, basic and diluted

Non-GAAP Financial Measures
In addition to operating results as calculated in accordance with GAAP, Sierra Oncology uses certain non-GAAP financial measures when evaluating operational performance. The following table presents the company's net loss and net loss per common share calculated in accordance with GAAP and as adjusted to remove the impact of certain non-cash charges. Sierra Oncology's management believes that these non-GAAP financial measures are useful to enhance understanding of the company's financial performance, and are more indicative of its operational performance and facilitate a better comparison among fiscal periods.

These non-GAAP financial measures are not, and should not be viewed as, substitutes for GAAP reporting measures. These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles, differ from GAAP measures with the same names, and may differ from non-GAAP financial measures with the same or similar names that are used by other companies. Sierra Oncology believes that non-GAAP financial measures should only be used to evaluate its results of operations in conjunction with the corresponding GAAP financial measures. Sierra Oncology encourages investors to carefully consider its results under GAAP, as well as the reconciliations between these presentations, to more fully understand our business.

Non-GAAP adjusted net loss and non-GAAP adjusted net loss per share exclude changes in fair value for warrant liabilities, changes in fair value for a securities issuance obligation and stock-based compensation. Sierra Oncology excludes changes in fair value of warrant liabilities because it is a non-cash expense and has no direct correlation to the operation of its business. Sierra Oncology excludes a non-cash charge pertaining to the changes in fair value of an obligation to issue common stock and a warrant to Gilead because it is a non-cash expense. Sierra Oncology excludes non-cash stock-based compensation expense from its non-GAAP financial measures because it believes that excluding this item provides meaningful supplemental information regarding operational performance. In particular, companies calculate stock-based compensation expense using a variety of valuation methodologies and subjective assumptions.

SIERRA ONCOLOGY, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(unaudited)
(in thousands, except share and per share data)

A reconciliation between GAAP net loss to non-GAAP adjusted net loss and GAAP net loss per common share to non-GAAP adjusted net loss per common share:


                                                                                 Three Months Ended                     Six Months Ended
                                                                           June 30,                              June 30,



                                                                  2020                              2019              2020                    2019






              GAAP net loss                                           $
              (16,462)              $
         (14,878)                          $
         (48,374) $
      (27,910)



              Adjustments:


               Changes in fair value of warrant liabilities (1)                                                                          16,240


               Changes in fair value to securities issuance
                obligation (2)                                                                                                            1,485



              Stock-based compensation (3)                                         3,617                         1,758                                     4,535         3,457




              Non-GAAP adjusted net loss                              $
              (12,845)              $
         (13,120)                          $
         (26,114) $
      (24,453)

                                                                                                                                                                           ===



               GAAP net loss per common share, basic
                and diluted                                              $
              (1.58)                $
         (7.97)                            $
         (4.71)  $
      (14.97)



              Adjustment to net loss per common share                               0.34                          0.94                                      2.17          1.86



               Non-GAAP adjusted net loss per common
                share, basic and diluted                                 $
              (1.24)                $
         (7.03)                            $
         (2.54)  $
      (13.11)

                                                                                                                                                                           ===

               Weighted-average shares used in computing net loss
                per common                                                     10,395,732                     1,867,207                                10,276,180     1,864,684
    share, basic and diluted


              (1)              To reflect a non-cash charge to
                                  other income (expense), net for
                                  the changes in fair value of
                                  warrant liabilities.



              (2)              To reflect a non-cash charge to
                                  research and development expense
                                  for the changes in fair value
                                  pertaining to the obligation to
                                  issue common stock and a warrant
                                  to Gilead.



              (3)              To reflect a non-cash stock-based
                                  compensation charge to research
                                  and development expense and
                                  general and administrative
                                  expense.

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SOURCE Sierra Oncology