Odonate Therapeutics, Inc. (Form: 10-Q, Received: 10/28/2020 08:04:59)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38318

Odonate Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

Delaware

82-2493065

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

4747 Executive Drive, Suite 210

San Diego, CA 92121

(858) 731-8180

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Exchange Act:


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, $0.01 par value per share	ODT	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 14, 2020, there were 38,525,561 shares of common stock outstanding.

TABLE OF CONTENTS

		Page

	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Condensed Balance Sheets as of September 30, 2020 (Unaudited) and December 31, 2019	3
	Condensed Statements of Operations for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)	4
	Condensed Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)	5
	Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019 (Unaudited)	7
	Notes to Condensed Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	21
Item 4.	Controls and Procedures	21

	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3.	Defaults upon Senior Securities	23
Item 4.	Mine Safety Disclosures	23
Item 5.	Other Information	23
Item 6.	Exhibits	24
	SIGNATURES	25

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ODONATE THERAPEUTICS, INC.

Condensed Balance Sheets

(in thousands, except par value and share amounts)

	September 30,			December 31,
	2020			2019
	(Unaudited)
Assets
Current assets:
Cash	$	188,258		$	180,460
Prepaid expenses and other current assets		2,469			3,468
Total current assets		190,727			183,928
Property and equipment, net		2,397			1,663
Right-of-use lease assets		4,160			1,581
Restricted cash		714			714
Other		994			941
Total assets	$	198,992		$	188,827
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	14,024		$	15,583
Accrued expenses		13,991			8,881
Lease liabilities, current portion		520			315
Total current liabilities		28,535			24,779
Lease liabilities, less current portion		4,856			1,748
Total liabilities		33,391			26,527
Commitments and contingencies (Note 5)
Stockholders' equity:
Common stock, $0.01 par value—100,000,000 shares authorized; 38,525,561 and 32,050,906 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		366			300
Additional paid-in capital		499,376			402,077
Accumulated deficit		(334,141	)		(240,077	)
Total stockholders' equity		165,601			162,300
Total liabilities and stockholders' equity	$	198,992		$	188,827

See accompanying notes.

ODONATE THERAPEUTICS, INC.

Condensed Statements of Operations

(Unaudited)

(in thousands, except share and per share amounts)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2020			2019			2020			2019
Operating expenses:
Research and development	$	28,242		$	25,097		$	86,966		$	78,181
General and administrative		2,408			2,666			8,033			8,040
Total operating expenses		30,650			27,763			94,999			86,221
Loss from operations		(30,650	)		(27,763	)		(94,999	)		(86,221	)
Other income, net		173			1,136			935			2,247
Net loss	$	(30,477	)	$	(26,627	)	$	(94,064	)	$	(83,974	)
Net loss per share:
Basic and diluted	$	(0.93	)	$	(0.88	)	$	(3.00	)	$	(3.15	)
Weighted-average shares outstanding:
Basic and diluted		32,821,835			30,268,295			31,376,672			26,635,107

See accompanying notes.

ODONATE THERAPEUTICS, INC.

Condensed Statements of Stockholders’ Equity

(Unaudited)

(in thousands, except share amounts)

	Common Stock					Additional Paid-in		Accumulated			Total Stockholders'
	Shares			Amount		Capital		Deficit			Equity
Balance at December 31, 2019		32,050,906		$	300	$	402,077	$	(240,077	)	$	162,300
Issuance of common stock under employee stock plans		27,532			1		520		-			521
Forfeiture of common stock underlying incentive units		(2,343	)		-		-		-			-
Equity-based compensation expense		-			-		2,586		-			2,586
Net loss		-			-		-		(30,163	)		(30,163	)
Balance at March 31, 2020		32,076,095			301		405,183		(270,240	)		135,244
Issuance of common stock under employee stock plans		58,412			-		1,133		-			1,133
Forfeiture of common stock underlying incentive units		(23,857	)		-		-		-			-
Equity-based compensation expense		-			-		2,595		-			2,595
Net loss		-			-		-		(33,424	)		(33,424	)
Balance at June 30, 2020		32,110,650			301		408,911		(303,664	)		105,548
Issuance of common stock, net of issuance costs		6,456,141			65		87,319		-			87,384
Issuance of common stock under employee stock plans		50,041			-		805		-			805
Forfeiture of common stock underlying incentive units		(91,271	)		-		-		-			-
Equity-based compensation expense		-			-		2,341		-			2,341
Net loss		-			-		-		(30,477	)		(30,477	)
Balance at September 30, 2020		38,525,561		$	366	$	499,376	$	(334,141	)	$	165,601

	Common Stock					Additional Paid-in		Accumulated			Total Stockholders'
	Shares			Amount		Capital		Deficit			Equity
Balance at December 31, 2018		26,747,438		$	244	$	252,012	$	(128,252	)	$	124,004
Issuance of common stock under employee stock plans		10,606			-		159		-			159
Forfeiture of common stock underlying incentive units		(5,618	)		-		-		-			-
Equity-based compensation expense		-			-		2,925		-			2,925
Net loss		-			-		-		(28,645	)		(28,645	)
Balance at March 31, 2019		26,752,426			244		255,096		(156,897	)		98,443
Issuance of common stock, net of issuance costs		4,750,000			48		117,655		-			117,703
Issuance of common stock under employee stock plans		18,502			-		427		-			427
Forfeiture of common stock underlying incentive units		(45,938	)		-		-		-			-
Equity-based compensation expense		-			-		2,990		-			2,990
Net loss		-			-		-		(28,702	)		(28,702	)
Balance at June 30, 2019		31,474,990			292		376,168		(185,599	)		190,861
Issuance of common stock, net of issuance costs		712,500			7		17,385		-			17,392
Issuance of common stock under employee stock plans		75,358			1		1,794		-			1,795
Forfeiture of common stock underlying incentive units		(178,857	)		-		-		-			-
Equity-based compensation expense		-			-		2,780		-			2,780
Net loss		-			-		-		(26,627	)		(26,627	)
Balance at September 30, 2019		32,083,991		$	300	$	398,127	$	(212,226	)	$	186,201

See accompanying notes.

ODONATE THERAPEUTICS, INC.

Condensed Statements of Cash Flows

(Unaudited)

(in thousands)

	Nine Months Ended
	September 30,
	2020			2019
Cash flows from operating activities:
Net loss	$	(94,064	)	$	(83,974	)
Adjustments to reconcile net loss to net cash used in operating activities:
Equity-based compensation expense		7,522			8,695
Depreciation		318			318
Non-cash lease expense		282			456
Loss on disposal of property and equipment		83			-
Changes in operating assets and liabilities:
Prepaid expenses and other assets		904			(3,313	)
Accounts payable		(1,559	)		2,186
Accrued expenses		5,110			4,020
Lease liabilities		(225	)		(505	)
Net cash used in operating activities		(81,629	)		(72,117	)
Cash flows from investing activities:
Purchases of property and equipment		(416	)		(164	)
Net cash used in investing activities		(416	)		(164	)
Cash flows from financing activities:
Proceeds from issuance of common stock, net of issuance costs		87,384			135,095
Proceeds from issuance of common stock under employee stock plans		2,459			2,381
Net cash provided by financing activities		89,843			137,476
Net increase in cash and restricted cash		7,798			65,195
Cash and restricted cash, beginning of period		181,174			139,301
Cash and restricted cash, end of period	$	188,972		$	204,496
Supplemental disclosure of cash flow information:
Initial recognition of right-of-use lease assets	$	2,861		$	2,215
Tenant improvement allowance	$	719		$	-
Property and equipment purchases included in accounts payable and accrued expenses	$	-		$	1

See accompanying notes.

ODONATE THERAPEUTICS, INC.

Notes to Condensed Financial Statements

(Unaudited)

1. Business

Odonate Therapeutics, Inc. (“Odonate” or the “Company”) is a pharmaceutical company dedicated to the development of best-in-class therapeutics that improve and extend the lives of patients with cancer. The Company’s initial focus is on the development of tesetaxel, an investigational, orally administered chemotherapy agent that belongs to a class of drugs known as taxanes, which are widely used in the treatment of cancer. Tesetaxel has several pharmacologic properties that make it unique among taxanes, including: oral administration with a low pill burden; a long (~8-day) terminal plasma half-life in humans, enabling the maintenance of adequate drug levels with relatively infrequent dosing; no history of hypersensitivity (allergic) reactions; and significant activity against chemotherapy-resistant tumors. In patients with metastatic breast cancer (“MBC”), tesetaxel was shown to have significant, single-agent antitumor activity in two multicenter, Phase 2 studies. The Company is currently conducting three studies in breast cancer. In August 2020, the Company announced positive top-line results from a multinational, multicenter, randomized, Phase 3 study of tesetaxel in MBC, known as CONTESSA. The Company’s goal for tesetaxel is to develop an effective chemotherapy choice for patients that provides quality-of-life advantages over current alternatives.

On September 1, 2020, the Company closed an underwritten public offering of 5,614,036 shares of common stock at a public offering price of $14.25 per share (collectively with the underwriters’ option, the “September 2020 Offering”). The underwriters exercised in full their option to purchase 842,105 additional shares of common stock. The aggregate gross proceeds from the September 2020 Offering were $92.0 million, and the net proceeds were $87.4 million after deducting underwriting discounts and commissions and offering costs.

As of September 30, 2020, the Company had $188.3 million in cash. The Company has incurred operating losses and negative cash flows from operations since inception. Management believes that the Company’s existing cash will be sufficient to meet the Company’s anticipated cash requirements through at least one year from the date this Quarterly Report on Form 10-Q is filed with the U.S. Securities and Exchange Commission (the “SEC”).

2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Use of Estimates

The Company’s condensed financial statements contained in this Quarterly Report on Form 10-Q have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of SEC Regulation S-X. Accordingly, certain information and disclosures required by GAAP for annual financial statements have been omitted. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Interim financial results are not necessarily indicative of results anticipated for the full year. These condensed financial statements should be read in conjunction with the Company’s audited financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

The preparation of the Company’s condensed financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in the Company’s condensed financial statements and accompanying notes. The most significant estimates and assumptions in the Company’s condensed financial statements relate to accrued expenses and equity-based compensation expense. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these

estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

Summary of Significant Accounting Policies

During the nine months ended September 30, 2020, there were no changes to the Company’s significant accounting policies as described in Note 2 to the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Recent Accounting Pronouncements

The Company has considered all recently issued accounting pronouncements and has concluded that there are no recently issued accounting pronouncements that may have a material impact on its results of operations, financial condition or cash flows based on current information.

3. Net Loss per Share

Basic net loss per share is calculated by dividing net loss by the weighted-average common shares outstanding during the period, without consideration of common stock equivalents. The basic net loss per share calculation excludes 1,245,685 and 1,550,643 outstanding shares of common stock held by Odonate Holdings, LLC (“Odonate Holdings”) as of September 30, 2020 and 2019, respectively, to be used to settle incentive units previously issued under the Odonate Management Holdings Equity Incentive Plan (the “Management Plan”). These shares of common stock are subject to transfer to the Company and cancellation until such incentive units are vested and exercised and, as such, are considered common stock equivalents. Therefore, the shares of common stock held by Odonate Holdings are excluded from the basic net loss per share calculation until the incentive units are exercised.

Diluted net loss per share is calculated by adjusting the weighted-average common shares outstanding for the dilutive effect of common stock equivalents outstanding for the period. Common stock equivalents, which consist of shares of common stock underlying incentive units and vested stock options, were excluded from the calculation of diluted net loss per share because they were anti-dilutive.

4. Balance Sheet Details

Property and equipment consisted of the following (in thousands):

	September 30,			December 31,
	2020			2019
Leasehold improvements	$	1,955		$	1,113
Office equipment		776			698
Furniture and fixtures		514			420
Software		130			130
Total gross property and equipment		3,375			2,361
Less accumulated depreciation		(978	)		(698	)
Property and equipment, net	$	2,397		$	1,663

Depreciation expense was $0.1 million and $0.3 million for the three and nine months ended September 30, 2020, respectively, and for the same periods in 2019.

Accrued expenses consisted of the following (in thousands):

	September 30,		December 31,
	2020		2019
Accrued clinical development costs	$	8,191	$	6,667
Accrued compensation and related expenses		5,714		2,122
Other accrued expenses		86		92
Total accrued expenses	$	13,991	$	8,881

5. Commitments and Contingencies

Lease Commitments

In March 2018, the Company entered into an agreement to lease office space in San Diego, California (the “San Diego Lease”) with aggregate payments of approximately $0.8 million over the term of the lease. The San Diego Lease originally provided for expiration on December 31, 2019. In August 2019, the Company entered into a First Amendment to the San Diego Lease to extend the term of the lease through the commencement of the New San Diego Lease (defined below). The San Diego Lease is classified as an operating lease.

In October 2019, the Company entered into an agreement to lease office space in San Diego, California (the “New San Diego Lease”) with aggregate payments of approximately $4.1 million over the 7.5-year term of the lease. The New San Diego Lease commenced in July 2020. The Company has an option to extend the New San Diego Lease for an additional 5 years at the end of the initial term. Further, the Company provided a standby letter of credit of $0.5 million as a security deposit during the term of the lease, subject to certain reductions beginning 4 years after the lease commencement. As of September 30, 2020, $0.5 million was pledged as collateral for the letter of credit and recorded as restricted cash. The New San Diego Lease is classified as an operating lease.

In February 2018, the Company entered into an agreement to lease office space in New York, New York (the “New York Lease”) with aggregate payments of approximately $2.8 million over the 7-year term of the lease. The Company has an option to extend the New York Lease for an additional three years at the end of the initial term. Further, the Company provided a standby letter of credit of $0.3 million in lieu of a security deposit during the term of the lease, subject to a reduction 3.5 years after the lease commencement. As of September 30, 2020, $0.3 million was pledged as collateral for the letter of credit and recorded as restricted cash. The New York lease is classified as an operating lease.

The Company recorded lease liabilities and right-of-use lease assets for the operating leases based on the present value of lease payments over the expected lease term, discounted using the Company’s incremental borrowing rate. The options to extend the operating leases were not recognized as part of the Company’s lease liabilities and right-of-use lease assets. As of September 30, 2020, the weighted-average remaining lease term and the weighted-average discount rate for the operating leases was 6.6 years and 4.0%, respectively. Rent expense under leases was $0.2 million and $0.6 million for the three and nine months ended September 30, 2020, respectively, and for the same periods in 2019. Cash paid for amounts included in the measurement of lease liabilities was $0.1 million and $0.3 million for the three and nine months ended September 30, 2020, respectively, and for the same periods in 2019.

Future minimum lease payments under operating leases as of September 30, 2020 are as follows (in thousands):

2020	$	96
2021		859
2022		935
2023		980
2024		1,010
Thereafter		2,252
Total future minimum lease payments		6,132
Less discount		(756	)
Total lease liabilities	$	5,376

Other Commitments

The Company enters into contracts in the normal course of business with third-party contract research organizations, contract development and manufacturing organizations and other service providers and vendors. These contracts generally provide for termination on notice and, therefore, are cancellable contracts and not considered contractual obligations and commitments.

Contingencies

From time to time, the Company may become subject to claims and litigation arising in the ordinary course of business. Other than as described below, the Company is not a party to any material legal proceedings, nor is it aware of any material pending or threatened litigation.

On September 16, 2020, a putative class action lawsuit was filed against the Company and the Company’s Chief Executive Officer, as well as the current and former Chief Financial Officers. The complaint was filed in the United States District Court for the Southern District of California and alleges that the Company made material misrepresentations and omissions regarding the safety and tolerability of tesetaxel in the Company’s public statements in violation of federal securities laws. The lawsuit seeks damages allegedly sustained by the class and an award of plaintiffs’ costs and attorney fees. The Company believes the complaint is without merit, and it has substantive defenses to the claims of liability and damages. The Company plans to respond accordingly. Due to the early stage of this matter, the Company is unable to estimate the possible loss or range of loss, if any, that may result from this matter.

6. Stockholders’ Equity

On June 28, 2019, the Company closed an underwritten public offering of 4,750,000 shares of common stock at a public offering price of $26.00 per share (collectively with the underwriters’ option, the “June 2019 Offering”). On July 2, 2019, the underwriters exercised in full their option to purchase 712,500 additional shares of common stock. The aggregate gross proceeds from the June 2019 Offering were $142.0 million, and the net proceeds were $135.1 million after deducting underwriting discounts and commissions and offering costs.

7. Equity Incentive Plans

2017 Stock Option Plan

A total of 6,300,000 shares of common stock have been reserved for issuance under the Odonate Therapeutics, Inc. 2017 Stock Option Plan (the “2017 Plan”). As of September 30, 2020, 1,763,645 shares of common stock remained available for future grants under the 2017 Plan.

2017 Employee Stock Purchase Plan

A total of 500,000 shares of common stock have been reserved for issuance under the Odonate Therapeutics, Inc. 2017 Employee Stock Purchase Plan (the “ESPP”). As of September 30, 2020, 430,650 shares of common stock remained available for future grants under the ESPP.

Management Plan

The Company issued an aggregate of 2,931,402 incentive units under the Management Plan. Following the Company’s initial public offering in December 2017, the Company has not granted, and will no longer grant, any incentive units. As of September 30, 2020, 1,245,685 outstanding shares of common stock were held by Odonate Holdings to be used to settle incentive units previously issued under the Management Plan.

Equity Awards

The activity related to equity awards, which are comprised of stock options and incentive units, during the nine months ended September 30, 2020 is summarized as follows:

	Equity Awards			Weighted- average Exercise Price per Share		Weighted- average Remaining Contractual Term⁽¹⁾ (years)		Aggregate Intrinsic Value⁽²⁾ (millions)
Outstanding at December 31, 2019		5,972,765		$	18.46
Granted		293,447		$	29.67
Exercised		(251,184	)	$	14.50
Cancelled/forfeited		(471,941	)	$	21.61
Outstanding at September 30, 2020		5,543,087		$	18.96		8.5	$	11.8
Exercisable at September 30, 2020		2,347,091		$	11.49		8.0	$	11.1

⁽¹⁾ Represents the weighted-average remaining contractual term of stock options. The incentive units have no expiration.

⁽²⁾ Aggregate intrinsic value represents the product of the number of equity awards outstanding or equity awards exercisable multiplied by the difference between the Company’s closing stock price per share on the last trading day of the period, which was $13.43 as of September 30, 2020, and the exercise price.

The total intrinsic value of equity awards exercised during the nine months ended September 30, 2020 and 2019 was $4.6 million and $7.9 million, respectively. The total fair value of equity awards vested during the nine months ended September 30, 2020 and 2019 was $9.5 million and $9.1 million, respectively.

Equity-based Compensation Expense

For the nine months ended September 30, 2020 and 2019, the weighted-average grant-date fair value per share was $24.02 and $17.67, respectively. The Company estimated the fair value of each stock option on the grant date using the Black-Scholes option-pricing model with the following assumptions:

	Nine Months Ended
	September 30,
	2020		2019
Expected volatility	81–82%		74–77%
Expected life	10 years		6–10 years
Risk-free interest rate	0.6–1.9%		1.9–2.5%
Expected dividend yield		0%		0%

Under the ESPP, eligible employees may purchase shares of the Company’s common stock twice per month at a price equal to 85% of the closing price of shares of the Company’s common stock on the date of each purchase. The benefit received by the employees, which is equal to a 15% discount on the shares of the Company’s common stock purchased, is recognized as equity-based compensation expense on the date of each purchase.

The classification of equity-based compensation expense is summarized as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Equity-based compensation expense:
Research and development	$	2,059	$	2,421	$	6,672	$	7,494
General and administrative		282		359		850		1,201
Total equity-based compensation expense	$	2,341	$	2,780	$	7,522	$	8,695

As of September 30, 2020, total unrecognized compensation cost related to unvested equity awards was $54.9 million, which is estimated to be recognized over a weighted-average period of 2.7 years. As of September 30, 2020, there was no unrecognized compensation cost related to shares of common stock issued under the ESPP.

8. Income Taxes

For the three and nine months ended September 30, 2020 and 2019, the Company did not recognize a provision for income taxes due to having recorded a full valuation allowance against its deferred tax assets. As of September 30, 2020 and December 31, 2019, the Company established a full valuation allowance against its deferred tax assets due to the uncertainty surrounding the realization of such assets. As of September 30, 2020 and December 31, 2019, the Company had no unrecognized tax benefits. The Company does not anticipate there will be a significant change in unrecognized tax benefits within the next 12 months.

9. License Agreement

In 2013, the Company licensed rights to tesetaxel in all major markets from Daiichi Sankyo Company, Limited (“Daiichi Sankyo”), the original inventor of the product. Under the Daiichi Sankyo license agreement, the Company is obligated to use commercially reasonable efforts to develop and commercialize tesetaxel in the following countries: France, Germany, Italy, Spain, the United Kingdom and the U.S. The Company is required to make aggregate future milestone payments of up to $31.0 million, contingent on attainment of certain regulatory milestones. Additionally, the Company is obligated to pay Daiichi Sankyo a tiered royalty that ranges from the low- to high-single digits, depending on annual net sales of tesetaxel.

Item 2. 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 condensed financial statements and accompanying notes included in this Quarterly Report on Form 10-Q and our audited financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2019.

Forward-looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the federal securities laws, and such statements may involve substantial risks and uncertainties. All statements, other than statements of historical facts included in this Quarterly Report on Form 10-Q, including, but not limited to, statements concerning: expectations regarding the outcome of CONTESSA, our Phase 3 study of tesetaxel in patients with metastatic breast cancer; expectations regarding the enrollment, completion and outcome of our other clinical studies; expectations regarding the timing for our planned New Drug Application submission for tesetaxel; expectations regarding our ability to obtain regulatory approval of tesetaxel; the unpredictable relationship between preclinical study results and clinical study results; our plans, objectives, goals, strategies, future events, future revenues or performance, future expenses, financing needs, plans or intentions relating to acquisitions, and business trends; and other information referred to under this section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” are forward-looking statements. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements by terms such as “may,” “might,” “will,” “objective,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “design,” “estimate,” “predict,” “potential,” “plan,” “anticipate,” “target,” “forecast” or the negative of these terms and similar expressions intended to identify forward-looking statements. Forward-looking statements are not historical facts and reflect our current views with respect to future events. Forward-looking statements are also based on assumptions and are subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

There are a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q. Such risks, uncertainties and other factors are described under “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019 and under “Risk Factors” in Item 1A of this Quarterly Report on Form 10-Q. We caution you that these risks, uncertainties and other factors may not contain all of the risks, uncertainties and other factors that are important to you. In addition, we cannot assure you that we will realize the results, benefits or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. All forward-looking statements in this Quarterly Report on Form 10-Q apply only as of the date made and are expressly qualified in their entirety by the cautionary statements included in this Quarterly Report on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances.

Company Overview

We are a pharmaceutical company dedicated to the development of best-in-class therapeutics that improve and extend the lives of patients with cancer. Our initial focus is on the development of tesetaxel, an investigational, orally administered chemotherapy agent that belongs to a class of drugs known as taxanes, which are widely used in the treatment of cancer. Tesetaxel has several pharmacologic properties that make it unique among taxanes, including: oral administration with a low pill burden; a long (~8-day) terminal plasma half-life in humans, enabling the maintenance of adequate drug levels with relatively infrequent dosing; no history of hypersensitivity (allergic) reactions; and significant activity against chemotherapy-resistant tumors. In patients with metastatic breast cancer (“MBC”), tesetaxel was shown to have significant, single-agent antitumor activity in two multicenter, Phase 2 studies. We are currently conducting three studies in breast cancer, as shown in the following table. In August 2020, we announced positive top-line results from a multinational, multicenter, randomized, Phase 3 study of

tesetaxel in MBC, known as CONTESSA. We plan to submit a New Drug Application (“NDA”) for tesetaxel to the U.S. Food and Drug Administration (“FDA”) in mid-2021. Our goal for tesetaxel is to develop an effective chemotherapy choice for patients that provides quality-of-life advantages over current alternatives.

Ongoing Tesetaxel Clinical Studies

HER2= human epidermal growth factor receptor 2; HR=hormone receptor; MBC=metastatic breast cancer;

TNBC=triple-negative breast cancer

CONTESSA

CONTESSA is a multinational, multicenter, randomized, Phase 3 study of tesetaxel, an investigational, orally administered taxane, in patients with MBC. CONTESSA is comparing tesetaxel dosed orally at 27 mg/m² on the first day of each 21 day cycle plus a reduced dose of capecitabine (1,650 mg/m²/day dosed orally for 14 days of each 21 day cycle) to the approved dose of capecitabine alone (2,500 mg/m²/day dosed orally for 14 days of each 21-day cycle) in 685 patients randomized 1:1 with human epidermal growth factor receptor 2 (“HER2”) negative, hormone receptor (“HR”) positive MBC previously treated with a taxane in the neoadjuvant or adjuvant setting. Capecitabine is an oral chemotherapy agent that is considered a standard of care treatment in MBC. Where indicated, patients must have received endocrine therapy with or without a cyclin dependent kinase (“CDK”) 4/6 inhibitor. The primary endpoint is progression-free survival (“PFS”) as assessed by an Independent Radiologic Review Committee (“IRC”). The secondary efficacy endpoints are overall survival (“OS”), objective response rate (“ORR”) as assessed by the IRC, and disease control rate (“DCR”) as assessed by the IRC.

In August 2020, we announced positive top-line results from CONTESSA. CONTESSA met the primary endpoint of improved PFS as assessed by the IRC. Median PFS was 9.8 months for tesetaxel plus a reduced dose of capecitabine versus 6.9 months for the approved dose of capecitabine alone, an improvement of 2.9 months. The risk of disease progression or death was reduced by 28.4% [hazard ratio=0.716 (95% confidence interval: 0.573-0.895); p=0.003] for patients who received tesetaxel plus a reduced dose of capecitabine versus patients who received the approved dose of capecitabine alone.

Tesetaxel plus capecitabine was associated with what we believe are manageable side effects consistent with findings from previous clinical studies. Grade ≥3 treatment-emergent adverse events (“TEAEs”) that occurred in ≥5% of patients were: neutropenia (71.2% for tesetaxel plus capecitabine vs. 8.3% for capecitabine alone); diarrhea (13.4% for tesetaxel plus capecitabine vs. 8.9% for capecitabine alone); hand foot syndrome (6.8% for tesetaxel plus capecitabine vs. 12.2% for capecitabine alone);

febrile neutropenia (12.8% for tesetaxel plus capecitabine vs. 1.2% for capecitabine alone); fatigue (8.6% for tesetaxel plus capecitabine vs. 4.5% for capecitabine alone); hypokalemia (8.6% for tesetaxel plus capecitabine vs. 2.7% for capecitabine alone); leukopenia (10.1% for tesetaxel plus capecitabine vs. 0.9% for capecitabine alone); and anemia (8.0% for tesetaxel plus capecitabine vs. 2.1% for capecitabine alone).

Adverse events resulting in treatment discontinuation in ≥1% of patients were: neutropenia or febrile neutropenia (4.2% for tesetaxel plus capecitabine vs. 1.5% for capecitabine alone); neuropathy (3.6% for tesetaxel plus capecitabine vs. 0.3% for capecitabine alone); diarrhea (0.9% for tesetaxel plus capecitabine vs. 1.5% for capecitabine alone); and hand-foot syndrome (0.6% for tesetaxel plus capecitabine vs. 2.1% for capecitabine alone). Treatment discontinuation due to any adverse event occurred in 23.1% of patients treated with tesetaxel plus capecitabine versus 11.9% of patients treated with capecitabine alone.

Grade 2 alopecia (hair loss) occurred in 8.0% of patients treated with tesetaxel plus capecitabine versus 0.3% of patients treated with capecitabine alone. Grade ≥3 neuropathy occurred in 5.9% of patients treated with tesetaxel plus capecitabine versus 0.9% of patients treated with capecitabine alone.

While OS data are immature, a recent interim analysis indicated the absence of an adverse effect on OS for tesetaxel plus a reduced dose of capecitabine. A protocol-specified final analysis of OS is expected to occur in 2022.

The results of CONTESSA have been selected for an oral presentation at the 2020 San Antonio Breast Cancer Symposium, to be held virtually December 8-11, 2020.

CONTESSA 2

CONTESSA 2 is a multinational, multicenter, Phase 2 study of tesetaxel, an investigational, orally administered taxane, in patients with MBC. CONTESSA 2 is investigating tesetaxel dosed orally at 27 mg/m² on the first day of each 21-day cycle plus a reduced dose of capecitabine (1,650 mg/m²/day dosed orally for 14 days of each 21-day cycle) in approximately 125 patients with HER2 negative, HR positive MBC not previously treated with a taxane. Capecitabine is an oral chemotherapy agent that is considered a standard-of-care treatment in MBC. Where indicated, patients must have received endocrine therapy with or without a CDK 4/6 inhibitor. The primary endpoint is ORR as assessed by an IRC. The secondary efficacy endpoints are duration of response (“DoR”) as assessed by the IRC, PFS as assessed by the IRC, DCR as assessed by the IRC and OS.

CONTESSA TRIO

CONTESSA TRIO is a multi-cohort, multicenter, Phase 2 study of tesetaxel, an investigational, orally administered taxane, in patients with MBC.

•

In Cohort 1, approximately 90 patients (with potential expansion to up to 150 patients) with locally advanced or metastatic triple-negative breast cancer (“TNBC”) who have not received prior chemotherapy for advanced disease will be randomized 1:1:1 to receive tesetaxel dosed orally at 27 mg/m² on the first day of each 21-day cycle plus either: (1) nivolumab at 360 mg by intravenous infusion on the first day of each 21-day cycle; (2) pembrolizumab at 200 mg by intravenous infusion on the first day of each 21-day cycle; or (3) atezolizumab at 1,200 mg by intravenous infusion on the first day of each 21-day cycle. Nivolumab and pembrolizumab (PD-1 inhibitors) and atezolizumab (a PD-L1 inhibitor) are immuno-oncology (“IO”) agents approved for the treatment of multiple types of cancer. One of these agents, atezolizumab, in combination with the intravenously delivered taxane, nab-paclitaxel, was recently approved by the FDA as a first-line treatment for patients with metastatic TNBC. The dual primary endpoints for Cohort 1 are ORR and PFS. Secondary endpoints include DoR and OS. Efficacy results for each of the three PD-(L)1 inhibitor combinations will be assessed for correlation with the results of each of the three approved PD-L1 diagnostic assays.

•

In Cohort 2, approximately 40 elderly patients (with potential expansion to up to 60 patients) with HER2 negative MBC will receive tesetaxel monotherapy dosed orally at 27 mg/m² on the first day of each 21-day cycle. The primary endpoint for Cohort 2 is ORR. Secondary endpoints include PFS, DoR and OS.

Components of Our Results of Operations

Research and Development Expense

Research and development expense consists primarily of expense associated with the development of tesetaxel and includes non-personnel-related and personnel-related expense. Non-personnel-related expense includes expense related to: (i) clinical study site payments; (ii) acquiring clinical study materials and the clinical study supply chain; (iii) manufacturing development and scale-up, including manufacturing registration and validation batches of tesetaxel; (iv) clinical and quality systems; and (v) regulatory submissions. Personnel-related expense includes expense related to salaries, benefits and equity-based compensation for personnel engaged in research and development functions.

Research and development expense is charged to operations as incurred when the expenditures relate to our research and development efforts and have no alternative future use. Payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received.

All of our research and development expense incurred to date has been incurred in connection with the development of tesetaxel. We do not expect our research and development expense to change significantly in the near term.

General and Administrative Expense

General and administrative expense includes non-personnel and personnel-related expense. Non-personnel-related expense includes expense related to: (i) professional fees for legal, patent, consulting, accounting and audit services; (ii) facilities and information technology; and (iii) insurance. Personnel-related expense includes expense related to salaries, benefits and equity-based compensation for personnel engaged in finance and administrative functions. We do not expect our general and administrative expense to change significantly in the near term.

Other Income, Net

Other income, net consists primarily of interest income generated from cash held in savings accounts. Other income, net also includes losses on disposal of property and equipment and gains and losses on foreign currency transactions.

Results of Operations

The following table summarizes our results of operations for each of the periods below (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Research and development expense	$	28,242	$	25,097	$	86,966	$	78,181
General and administrative expense	$	2,408	$	2,666	$	8,033	$	8,040
Other income, net	$	173	$	1,136	$	935	$	2,247

Research and Development Expense

The following table summarizes our research and development expense for each of the periods below (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Non-personnel expense:
Clinical development	$	17,293	$	15,158	$	53,370	$	48,077
Other		404		502		1,553		1,612
Total non-personnel expense		17,697		15,660		54,923		49,689
Personnel expense:
Salaries, bonuses and benefits		8,486		7,016		25,371		20,998
Equity-based compensation expense		2,059		2,421		6,672		7,494
Total personnel expense		10,545		9,437		32,043		28,492
Total research and development expense	$	28,242	$	25,097	$	86,966	$	78,181

Research and development expense was $28.2 million and $87.0 million for the three and nine months ended September 30, 2020, respectively, compared to $25.1 million and $78.2 million, respectively, for the same periods in 2019. The increase in research and development expense was due primarily to increased activities and headcount in connection with our tesetaxel clinical development program.

General and Administrative Expense

The following table summarizes our general and administrative expense for each of the periods below (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Non-personnel expense	$	1,110	$	1,277	$	4,038	$	3,726
Personnel expense:
Salaries, bonuses and benefits		1,016		1,030		3,145		3,113
Equity-based compensation expense		282		359		850		1,201
Total personnel expense		1,298		1,389		3,995		4,314
Total general and administrative expense	$	2,408	$	2,666	$	8,033	$	8,040

General and administrative expense of $2.4 million and $8.0 million for the three and nine months ended September 30, 2020, respectively, remained consistent compared to $2.7 million and $8.0 million, respectively, for the same periods in 2019.

Other Income, Net

Other income, net was $0.2 million and $0.9 million for the three and nine months ended September 30, 2020, respectively, compared to $1.1 million and $2.2 million, respectively, for the same periods in 2019. The decrease in other income, net was due primarily to decreased interest income.

Liquidity and Capital Resources

On September 1, 2020, we closed an underwritten public offering of 5,614,036 shares of common stock at a public offering price of $14.25 per share (collectively with the underwriters’ option, the “September 2020 Offering”). The underwriters exercised in full their option to purchase 842,105 additional shares of common stock. The aggregate gross proceeds from the September 2020 Offering were $92.0

million, and the net proceeds were $87.4 million after deducting underwriting discounts and commissions and offering costs.

As of September 30, 2020 and December 31, 2019, we had cash in the amount of $188.3 million and $180.5 million, respectively. We believe that our existing cash will be sufficient to meet our anticipated cash requirements through at least one year from the date this Quarterly Report on Form 10-Q is filed with the U.S. Securities and Exchange Commission (the “SEC”).

We have incurred losses in each year since our inception. Our net loss was $30.5 million and $94.1 million for the three and nine months ended September 30, 2020, respectively, compared to $26.6 million and $84.0 million, respectively, for the same periods in 2019. As of September 30, 2020 and December 31, 2019, we had an accumulated deficit of $334.1 million and $240.1 million, respectively. Substantially all of our operating losses resulted from expenses incurred in connection with advancing tesetaxel through development activities and general and administrative costs associated with our operations.

To date, we have funded our operations through the sale of equity securities. Since our inception, we have raised $466.9 million in net proceeds from the sale of equity securities.

The following table summarizes our net cash flow activity for each of the periods below (in thousands):

	Nine Months Ended
	September 30,
	2020			2019
Net cash (used in) provided by:
Operating activities	$	(81,629	)	$	(72,117	)
Investing activities		(416	)		(164	)
Financing activities		89,843			137,476
Net increase in cash and restricted cash	$	7,798		$	65,195

Net cash used in operating activities was $81.6 million and $72.1 million for the nine months ended September 30, 2020 and 2019, respectively. Net cash used in operating activities was primarily the result of our net loss and change in working capital, partially offset by equity-based compensation expense, depreciation expense and non-cash lease expense.

Net cash used in investing activities was $0.4 million and $0.2 million for the nine months ended September 30, 2020 and 2019, respectively. Net cash used in investing activities was the result of purchases of property and equipment.

Net cash provided by financing activities was $89.8 million and $137.5 million for the nine months ended September 30, 2020 and 2019, respectively. For the nine months ended September 30, 2020 and 2019, net cash provided by financing activities was primarily the result of net proceeds from the sale of common stock in underwritten public offerings.

Until such time as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic partnerships and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders 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 stockholders. Debt 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 additional funds through collaborations, strategic partnerships or licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates, associated intellectual property, our other technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable to us. 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 candidate even if we would otherwise prefer to develop and market such product candidate ourselves.

Impact of the COVID-19 Pandemic

Although the ongoing Coronavirus Disease 2019 (“COVID-19”) pandemic did not have a material impact on our results of operations, financial condition or clinical studies during the nine months ended September 30, 2020, we are unable to accurately predict the full impact that the COVID-19 pandemic will have on our business in the future due to numerous factors that are not within our control, including its duration and severity.

Contractual Obligations and Commitments

In March 2018, we entered into an agreement to lease office space in San Diego, California (the “San Diego Lease”) with aggregate payments of approximately $0.8 million over the term of the lease. The San Diego Lease originally provided for expiration on December 31, 2019. In August 2019, the Company entered into a First Amendment to the San Diego Lease to extend the term of the lease through the commencement of the New San Diego Lease (defined below).

In October 2019, we entered into an agreement to lease office space in San Diego, California (the “New San Diego Lease”) with aggregate payments of approximately $4.1 million over the 7.5-year term of the lease. The New San Diego Lease commenced in July 2020. We have an option to extend the New San Diego Lease for an additional 5 years at the end of the initial term. Further, we provided a standby letter of credit of $0.5 million as a security deposit during the term of the lease, subject to certain reductions beginning 4 years after the lease commencement. As of September 30, 2020, $0.5 million was pledged as collateral for the letter of credit and recorded as restricted cash.

In February 2018, we entered into an agreement to lease office space in New York, New York (the “New York Lease”) with aggregate payments of approximately $2.8 million over the 7-year term of the lease. We have an option to extend the New York Lease for an additional three years at the end of the initial term. Further, we provided a standby letter of credit of $0.3 million in lieu of a security deposit during the term of the lease, subject to a reduction 3.5 years after the lease commencement. As of September 30, 2020, $0.3 million was pledged as collateral for the letter of credit and was recorded as restricted cash.

We enter into contracts in the normal course of business with contract development and manufacturing organizations and other service providers and vendors. These contracts generally provide for termination on notice and, therefore, are cancellable contracts and not considered contractual obligations and commitments.

In 2013, we licensed rights to tesetaxel in all major markets from Daiichi Sankyo Company, Limited (“Daiichi Sankyo”), the original inventor of the product. Under the Daiichi Sankyo license agreement, we are obligated to use commercially reasonable efforts to develop and commercialize tesetaxel in the following countries: France, Germany, Italy, Spain, the United Kingdom and the U.S. We are required to make aggregate future milestone payments of up to $31.0 million, contingent on attainment of certain regulatory milestones. Additionally, we are obligated to pay Daiichi Sankyo a tiered royalty that ranges from the low- to high-single digits, depending on annual net sales of tesetaxel.

Off–Balance Sheet Arrangements

During the periods presented, we did not have, nor do we currently have, any off–balance sheet arrangements as defined under the rules of the SEC.

Jumpstart Our Business Startups Act

We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under this act, an emerging growth company can delay the adoption of new or revised accounting standards issued subsequent to the enactment of the JOBS Act until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. However, we intend to rely on other exemptions provided by the JOBS Act, including without limitation, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended. We will remain an emerging growth company until December 31, 2023 unless, prior to that time, we: (i) have more than $1.07 billion in annual gross revenue; (ii) have a market value for our common stock held by non-affiliates of more than $700 million as of the last day of our second quarter of any year; or (iii) issue more than $1.0 billion of non-convertible debt over a three-year period.

Critical Accounting Policies and Significant Judgments and Estimates

We believe the estimates, assumptions and judgments involved in the accounting policies described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2019 are most critical to understanding and evaluating our reported financial results. During the nine months ended September 30, 2020, there were no changes to our critical accounting policies and estimates as described in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2019.

Recent Accounting Pronouncements

See Note 2 to our condensed financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are a smaller reporting company, as defined by Rule 12b-2 under the Securities and Exchange Act of 1934 and in Item 10(f)(1) of Regulation S-K, and are not required to provide the information under this item.

Item 4. Controls and Procedures

Management’s Evaluation of our Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and our principal financial officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures. Based on that evaluation of our disclosure controls and procedures as of September 30, 2020, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures as of such date are effective at the reasonable assurance level. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and our

management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting that occurred during our most recent quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may become subject to claims and litigation arising in the ordinary course of business. Other than as described below, we are not a party to any material legal proceedings, nor are we aware of any material pending or threatened litigation.

On September 16, 2020, a putative class action lawsuit was filed against us and our Chief Executive Officer, as well as our current and former Chief Financial Officers. The complaint was filed in the United States District Court for the Southern District of California and alleges that we made material misrepresentations and omissions regarding the safety and tolerability of tesetaxel in our public statements in violation of federal securities laws. The lawsuit seeks damages allegedly sustained by the class and an award of plaintiffs’ costs and attorney fees. We believe the complaint is without merit, and we have substantive defenses to the claims of liability and damages. We plan to respond accordingly.

Item 1A. Risk Factors

Our business is subject to various risks, including those described in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019. There have been no material changes from the risk factors disclosed in Item 1A of our Annual Report on Form 10-K, except for the additional risk factor set forth below.

The ongoing COVID-19 pandemic may disrupt our operations and affect our ability to successfully conduct clinical studies.

We are unable to accurately predict the full impact that the ongoing Coronavirus Disease 2019 (“COVID-19”) pandemic will have on our results from operations, financial condition and clinical studies due to numerous factors that are not within our control, including its duration and severity. Stay-at-home orders, business closures, travel restrictions, supply chain disruptions and employee illness or quarantines could result in disruptions to our operations, which could adversely impact our results from operations and financial condition. In addition, the COVID-19 pandemic has resulted in ongoing volatility in financial markets. If our access to capital is restricted or associated borrowing costs increase as a result of developments in financial markets relating to the COVID-19 pandemic, our operations and financial condition could be adversely impacted.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits


Exhibit No.		Description

3.1		Certificate of Incorporation of Odonate (incorporated herein by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1 (File No. 333-221533), as filed with the SEC on November 27, 2017)

3.2		First Amended and Restated Bylaws (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, as filed with the SEC on June 24, 2019)

31.1		Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934

31.2		Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934

32.1#		Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(b) or 15d-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

#	Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Odonate Therapeutics, Inc.

Date: October 28, 2020	By:	/s/ Kevin Tang
		Kevin Tang
		Chairman and Chief Executive Officer
		(principal executive officer)

		/s/ Michael Hearne
		Michael Hearne
		Chief Financial Officer
		(principal financial and accounting officer)

EXHIBIT 31.1

SECTION 302 CERTIFICATION

I, Kevin Tang, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Odonate Therapeutics, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared;

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: October 28, 2020	By:	/s/ Kevin Tang
		Kevin Tang
		Chairman and Chief Executive Officer (principal executive officer)

EXHIBIT 31.2

SECTION 302 CERTIFICATION

I, Michael Hearne, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Odonate Therapeutics, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: October 28, 2020	By:	/s/ Michael Hearne
		Michael Hearne
		Chief Financial Officer (principal financial and accounting officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Odonate Therapeutics, Inc. (the “Company”) for the quarter ended September 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:

•

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

•

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: October 28, 2020


/s/ Kevin Tang
Kevin Tang
Chairman and Chief Executive Officer (principal executive officer)

/s/ Michael Hearne
Michael Hearne
Chief Financial Officer (principal financial and accounting officer)

The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Note: A signed original of this written statement required by Section 906 has been provided to Odonate Therapeutics, Inc. and will be retained by Odonate Therapeutics, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.