UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended March 31, 2021

OR

For the transition period from                         to                        

Commission File Number: 001-38318

Odonate Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

3 East 28th Street, 10th Floor

New York, New York 10016

(332) 206-0935

(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:

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 the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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 May 7, 2021, there were 38,507,109 shares of common stock outstanding.

TABLE OF CONTENTS

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ODONATE THERAPEUTICS, INC.

Condensed Balance Sheets

(in thousands, except par value and share amounts)

See accompanying notes.

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ODONATE THERAPEUTICS, INC.

Condensed Statements of Operations

(Unaudited)

(in thousands, except share and per share amounts)

See accompanying notes.

4

ODONATE THERAPEUTICS, INC.

Condensed Statements of Stockholders’ Equity

(Unaudited)

(in thousands, except share amounts)

See accompanying notes.

5

ODONATE THERAPEUTICS, INC.

Condensed Statements of Cash Flows

(Unaudited)

(in thousands)

See accompanying notes.

6

ODONATE THERAPEUTICS, INC.

Notes to Condensed Financial Statements

(Unaudited)

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ODONATE THERAPEUTICS, INC.

Notes to Condensed Financial Statements

(Unaudited)

8

ODONATE THERAPEUTICS, INC.

Notes to Condensed Financial Statements

(Unaudited)

9

ODONATE THERAPEUTICS, INC.

Notes to Condensed Financial Statements

(Unaudited)

10

ODONATE THERAPEUTICS, INC.

Notes to Condensed Financial Statements

(Unaudited)

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ODONATE THERAPEUTICS, INC.

Notes to Condensed Financial Statements

(Unaudited)

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ODONATE THERAPEUTICS, INC.

Notes to Condensed Financial Statements

(Unaudited)

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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, 2020.

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 our future expenses, potential liabilities relating to litigation and financing needs; 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, 2020 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 formerly focused 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. We recently announced the discontinuation of development of tesetaxel and our intent to wind down tesetaxel-related operations. We are working with clinical sites to transition patients in ongoing tesetaxel studies to appropriate alternative therapies or facilitate continuation of treatment with tesetaxel under compassionate use programs where appropriate.

Results of Operations

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

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Research and Development Expense

All of our research and development expense incurred until recently had been incurred in connection with the development of tesetaxel and recently includes the wind-down of tesetaxel-related operations. Research and development expense includes non-personnel-related and personnel-related expense. Non-personnel-related expense primarily consists of expense incurred prior to the discontinuation of development of tesetaxel and includes expense related to: (i) manufacturing development and scale-up, including manufacturing registration and validation batches of tesetaxel; (ii) clinical study site payments; (iii) acquiring clinical study materials and the clinical study supply chain; (iv) pharmacokinetic studies; and (v) clinical and quality systems. Personnel-related expense includes expense related to salaries, benefits, restructuring expense and equity-based compensation for personnel engaged in research and development functions. We expect our research and development expense to decrease significantly due to the discontinuation of development of tesetaxel and wind-down of tesetaxel-related operations.

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

Research and development expense was $30.9 million and $27.9 million for the three months ended March 31, 2021 and 2020, respectively. The increase in research and development expense was due primarily to $5.5 million recorded for restructuring expense related to one-time employee termination benefits in connection with the discontinuation of development of tesetaxel, offset by a decrease in activities and headcount in connection with our tesetaxel clinical development program.

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, restructuring expense and equity-based compensation for personnel engaged in finance and administrative functions. We expect our general and administrative expense to decrease significantly due to the discontinuation of development of tesetaxel and wind‑down of tesetaxel-related operations.

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

General and administrative expense of $2.9 million for the three months ended March 31, 2021 remained consistent compared to $2.9 million for the same period in 2020.

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.

Other income, net was $0.1 million and $0.7 million for the three months ended March 31, 2021 and 2020, respectively. The decrease in other income, net was due primarily to decreased interest income.

Liquidity and Capital Resources

As of March 31, 2021 and December 31, 2020, we had cash in the amount of $133.2 million and $157.3 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”).

Net cash used in operating activities was $24.9 million and $27.8 million for the three months ended March 31, 2021 and 2020, 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 and amortization expense and non-cash lease expense.

We entered into an Open Market Sale Agreement during the three months ended March 31, 2021; see Note 6 to our condensed financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

We expect to finance our future cash needs with cash on hand. If necessary or appropriate, we may raise additional capital through equity offerings, debt financings, collaborations, strategic partnerships or 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 intellectual property on terms that may not be favorable to us.

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Contractual Obligations and Commitments

See Note 5 to the condensed financial statements included in Item 1 of this Quarterly Report on Form 10-Q, under the subheading “Lease Commitments,” for information regarding our material lease agreements and Note 9 for information regarding our license agreement with Daiichi Sankyo Company, Limited for rights to 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, an exemption from 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 shares of 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, 2020 are most critical to understanding and evaluating our reported financial results. During the three months ended March 31, 2021, 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, 2020.

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 March 31, 2021, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures as of such date are effective at the

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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.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

See Note 5 to the condensed financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

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, 2020. 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 factors set forth below.

Risks Related to Our Business

If we decide to dissolve and liquidate our company, the amount of cash that may be available for distribution to our stockholders is uncertain.

If our board of directors decides to pursue a dissolution and liquidation of our company, the amount of cash that may be available for distribution to our stockholders is uncertain. This amount will depend on the resolution of our financial commitments and contingent liabilities and the timing of the decision to liquidate. Our financial commitments and contingent liabilities include: (i) personnel costs, including severance; (ii) contractual obligations to vendors and clinical study sites; (iii) non-cancelable lease obligations; and (iv) existing and potential litigation against us.

Risks Related to Ownership of Shares of Our Common Stock

If we are not able to comply with the applicable continued listing requirements or standards of the Nasdaq Global Select Market, our common stock could be delisted.

Our common stock is currently listed on the Nasdaq Global Select Market. To maintain this listing, we must satisfy continued listing requirements and standards. There can be no assurances that we will be able to comply with the applicable listing requirements and standards.

If our common stock is delisted from the Nasdaq Global Select Market and is not eligible for quotation or listing on another market or exchange, trading of our shares of common stock could be conducted only in the over-the-counter market or on an electronic bulletin board established for unlisted securities. In such event, it would likely become more difficult to dispose of, or obtain accurate price quotations for, shares of our common stock.

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.

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Item 6. Exhibits

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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.

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