mrtx-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2021

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

Commission File Number: 001-35921

______________________________________________________

Mirati Therapeutics, Inc.

(Exact Name of Registrant as Specified in Its Charter)

______________________________________________________


Delaware			46-2693615
(State of Incorporation)			(I.R.S. Employer Identification No.)
3545 Cray Court,	San Diego,	California	92121
(Address of Principal Executive Offices)			(Zip Code)

(858) 332-3410

(Registrant’s Telephone Number, Including Area Code)

______________________________________________________

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


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per share	MRTX	The Nasdaq Stock Market LLC

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 during the preceding 12 months (or 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 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, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Securities Exchange Act of 1934.

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 financing 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 April 29, 2021, there were 51,439,928 total shares of common stock outstanding.

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MIRATI THERAPEUTICS, INC.

FORM 10-Q

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION		1

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets as of March 31 , 202 1 and December 31, 20 20	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 202 1 and 20 20	2
	Condensed Consolidated Statements of Changes in Shareholders' Equity for the Three Months Ended March 31, 202 1 and 20 20	3
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 3 1 , 202 1 and 20 20	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	22
Item 4.	Controls and Procedures	22

PART II. OTHER INFORMATION		23

Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 6.	Exhibits	48

SIGNATURES		50

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PART I. FINANCIAL INFORMATION


ITEM 1.			Financial Statements

MIRATI THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except for share and per share amounts)


	March 31, 2021		December 31, 2020
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	329,503	$	885,562
Short-term investments	957,660		504,544
Other current assets	16,347		13,537
Total current assets	1,303,510		1,403,643
Property and equipment, net	9,061		7,809
Long-term investment	11,676		15,629
Right-of-use asset	39,278		39,890
Other long-term assets	17,307		9,157
Total assets	$	1,380,832	$	1,476,128
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	19,602	$	18,117
Accrued liabilities	57,503		53,355
Total current liabilities	77,105		71,472
Lease liability	43,175		41,905
Other liabilities	1,139		1,962
Total liabilities	121,419		115,339
Commitments and contingencies (see Note 9)
Shareholders’ equity
Preferred stock, $0.001 par value; 10,000,000 shares authorized; none issued and outstanding at both March 31, 2021 and December 31, 2020	—		—
Common stock, $0.001 par value; 100,000,000 shares authorized; 51,375,786 and 50,439,069 issued and outstanding at March 31, 2021 and December 31, 2020, respectively	51		50
Additional paid-in capital	2,515,824		2,481,218
Accumulated other comprehensive income	9,456		9,759
Accumulated deficit	(1,265,918)		(1,130,238)
Total shareholders’ equity	1,259,413		1,360,789
Total liabilities and shareholders’ equity	$	1,380,832	$	1,476,128

See accompanying notes

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MIRATI THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited, in thousands, except for share and per share amounts)


	Three months ended March 31,
	2021		2020
Revenue
License and collaboration revenues	$	—	$	267
Total revenue	—		267
Expenses
Research and development	104,071		71,708
General and administrative	28,350		18,046
Total operating expenses	132,421		89,754
Loss from operations	(132,421)		(89,487)
Other (expense) income, net	(3,259)		2,832
Net loss	$	(135,680)	$	(86,655)
Unrealized loss on available-for-sale investments	(303)		(182)
Comprehensive loss	$	(135,983)	$	(86,837)
Basic and diluted net loss per share	$	(2.67)	$	(2.02)
Weighted average common shares outstanding, basic and diluted	50,779,364		42,886,691

See accompanying notes

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MIRATI THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Unaudited, in thousands, except share data)


Three Months Ended March 31, 2021
	Common Stock			Additional paid-in capital		Accumulated other comprehensive income		Accumulated deficit		Total shareholders' equity

	Shares	Amount
Balance at December 31, 2020	50,439,069	$	50	$	2,481,218	$	9,759	$	(1,130,238)	$	1,360,789
Net loss for the period	—	—		—		—		(135,680)		(135,680)
Share-based compensation expense	—	—		24,722		—		—		24,722
Issuance of common stock under equity incentive plans	312,903	—		9,885		—		—		9,885
Net exercise of warrants	623,814	1		(1)		—		—		—
Unrealized loss on investments	—	—		—		(303)		—		(303)
Balance at March 31, 2021	51,375,786	$	51	$	2,515,824	$	9,456	$	(1,265,918)	$	1,259,413


Three Months Ended March 31, 2020
	Common Stock			Additional paid-in capital		Accumulated other comprehensive income		Accumulated deficit		Total shareholders' equity

	Shares	Amount
Balance at December 31, 2019	39,517,329	$	40	$	1,144,667	$	9,889	$	(772,301)	$	382,295
Net loss for the period	—	—		—		—		(86,655)		(86,655)
Issuance of common stock, net of issuance costs	3,538,462	4		323,973		—		—		323,977
Share-based compensation expense	—	—		21,567		—		—		21,567
Issuance of common stock under equity incentive plans	496,521	—		15,183		—		—		15,183
Proceeds from disgorgement of shareholders' short-swing profits	—	—		41		—		—		41
Unrealized loss on investments	—	—		—		(182)		—		(182)
Balance at March 31, 2020	43,552,312	$	44	$	1,505,431	$	9,707	$	(858,956)	$	656,226

See accompanying notes

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MIRATI THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)


	Three months ended March 31,
	2021		2020
Operating activities:
Net loss	$	(135,680)	$	(86,655)
Non-cash adjustments reconciling net loss to operating cash flows:

Change in fair value of long-term investment	3,953		—
Depreciation of property and equipment	294		126
Amortization of premium and accretion of discounts on investments	1,001		(520)
Share-based compensation expense	24,722		21,567
Changes in operating assets and liabilities:
Other current assets	(2,810)		(100)
Other long-term assets	(8,149)		(519)
Right-of-use asset	612		188
Lease liability	1,270		(198)
Accounts payable, accrued liabilities, and other liabilities	4,371		7,107
Cash flows used in operating activities	(110,416)		(59,004)
Investing activities:
Purchases of short-term investments	(621,661)		(230,384)
Sales and maturities of short-term investments	167,240		108,381
Purchases of property and equipment	(1,107)		(224)
Cash flows used in investing activities	(455,528)		(122,227)
Financing activities:
Proceeds from issuance of common stock, net of issuance costs	—		323,977
Proceeds from issuance of common stock under equity incentive plans	9,885		15,183
Proceeds from disgorgement of shareholders' short-swing profits	—		41

Cash flows provided by financing activities	9,885		339,201
(Decrease) increase in cash, cash equivalents and restricted cash	(556,059)		157,970
Cash, cash equivalents and restricted cash, beginning of period	886,182		46,856
Cash, cash equivalents and restricted cash, end of period	$	330,123	$	204,826

Reconciliation of cash, cash equivalents and restricted cash, end of period:
Cash and cash equivalents	$	329,503	$	204,505
Restricted cash included in other long-term assets	620		321
Total cash, cash equivalents and restricted cash	$	330,123	$	204,826

Supplemental disclosures of non-cash investing activities:
Purchases of property and equipment included within accounts payable and accrued liabilities	$	439	$	408

See accompanying notes

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MIRATI THERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2021

(Unaudited)

1. Description of Business

Mirati Therapeutics, Inc. ("Mirati" or the "Company") is a clinical-stage oncology company developing product candidates to address the genetic and immunological promoters of cancer. The Company was incorporated under the laws of the State of Delaware on April 29, 2013 as Mirati Therapeutics, Inc. and is located in San Diego, California. The Company has a wholly owned subsidiary in Canada, MethylGene, Inc. ("MethylGene"), and operates in one business segment, primarily in the United States. The Company's common stock has been listed on the Nasdaq Global Select Market since June 5, 2018 and was previously listed on the Nasdaq Capital Market since July 15, 2013, under the ticker symbol "MRTX."

2. Summary of Significant Accounting Policies

Basis of Presentation

The unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC") and, therefore, certain information and disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been omitted.

In the opinion of management, the information reflects all adjustments necessary to make the results of operations for the interim periods a fair statement of such operations. All such adjustments are of a normal recurring nature. Interim results are not necessarily indicative of results for the full year. The condensed consolidated balance sheet at December 31, 2020 has been derived from the audited consolidated financial statements at that date, but does not include all information and footnotes required by U.S. GAAP for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

Use of Estimates

The preparation of the Company's unaudited condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period.

Reported amounts and footnote disclosures reflect the overall economic conditions that are most likely to occur and anticipated measures management intends to take. Actual results could differ materially from those estimates. Estimates and assumptions are reviewed quarterly. Any revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Cash, Cash Equivalents and Short-term Investments

Cash and cash equivalents consist of cash and highly liquid securities with original maturities at the date of acquisition of ninety days or less. Investments with an original maturity of more than ninety days are considered short-term investments and have been classified by management as available-for-sale. These investments are classified as current assets, even though the stated maturity date may be one year or more beyond the current balance sheet date, which reflects management’s intention to use the proceeds from sales of these securities to fund its operations, as necessary. Such investments are carried at fair value, and the unrealized gains and losses are reported as a component of accumulated other comprehensive income in shareholders’ equity until realized. Realized gains and losses from the sale of available-for-sale securities, if any, are determined on a specific identification basis.

Concentration of Credit Risk

The Company invests its excess cash in accordance with its investment policy. The Company's investments are comprised primarily of commercial paper and debt instruments of financial institutions, corporations, U.S. government-sponsored agencies and the U.S. Treasury. The Company mitigates credit risk by maintaining a diversified portfolio and

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limiting the amount of investment exposure as to institution, maturity and investment type. Financial instruments that potentially subject the Company to significant credit risk consist principally of cash equivalents and short-term investments.

Revenue Recognition

The Company recognizes revenue in connection with certain collaboration and license agreements in accordance with the guidance of Revenue From Contracts With Customers, Accounting Standards Codification ("ASC") Topic 606 ("Topic 606"). Under Topic 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements the Company determines are within the scope of Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Leases

The Company determines if an arrangement is a lease at inception. Lease right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. For operating leases with an initial term greater than 12 months, the Company recognizes operating lease right-of-use assets and operating lease liabilities based on the present value of lease payments over the lease term at the commencement date. Operating lease right-of-use assets are comprised of the lease liability plus any lease payments made and excludes lease incentives. Lease terms include options to renew or terminate the lease when the Company is reasonably certain that the renewal option will be exercised or when it is reasonably certain that the termination option will not be exercised. For operating leases, if the interest rate used to determine the present value of future lease payments it not readily determinable, the Company estimates its incremental borrowing rate as the discount rate for the lease. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in similar economic environments. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has elected the practical expedient to not separate lease and non-lease components.

Net Loss per Share

Basic net loss per common share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period, without consideration for common share equivalents as they are anti-dilutive. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares and common share equivalents outstanding for the period. Common share equivalents outstanding, determined using the treasury stock method, are comprised of shares that may be issued under the Company’s stock option and warrant agreements.

The following table presents the weighted-average number of common share equivalents, calculated using the treasury stock method, not included in the calculation of diluted net loss per share due to the anti-dilutive effect of the securities:


	Three months ended March 31,
	2021	2020
Common stock options	2,758,415	2,174,353
Common stock warrants	8,043,004	9,692,771
Total	10,801,419	11,867,124

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Recently Adopted and Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") or other standard setting bodies that are adopted by the Company as of the specified effective date. The Company has evaluated recently issued accounting pronouncements and does not believe any will have a material impact on the Company’s condensed consolidated financial statements or related financial statement disclosures.

3. Investments

The following tables summarize the Company's short-term investments (in thousands):


		As of March 31, 2021
	Maturity	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Corporate debt securities	2 years or less	$	182,895	$	45	$	(181)	$	182,759
Commercial paper	1 year or less	553,455		37		(19)		553,473
U.S. Agency bonds	2 years or less	133,484		48		—		133,532
U.S. Treasury bills	2 years or less	78,777		10		—		78,787
Sovereign debt securities	1 year or less	9,113		—		(4)		9,109
		$	957,724	$	140	$	(204)	$	957,660

As of December 31, 2020

Maturity

SEC Form 10-Q filed by Mirati Therapeutics, Inc.