Business Overview and History:
Day One Biopharmaceuticals, Inc. (NASDAQ:DAWN) is a commercial-stage biopharmaceutical company dedicated to developing and commercializing targeted therapies for people of all ages with life-threatening diseases, with a particular focus on oncology. The company was founded in 2018 and has quickly established itself as a key player in the oncology space, driven by the recent approval and launch of its lead product, OJEMDA, as well as a robust pipeline of promising product candidates.
Day One Biopharmaceuticals was founded in November 2018 with the goal of addressing the critical unmet need in pediatric cancer drug development. The company's name was inspired by the "Day One Talk" that physicians have with patients and their families about an initial cancer diagnosis and treatment plan.
In December 2019, Day One entered into a significant asset purchase agreement with Takeda Pharmaceutical Company Limited, acquiring certain technology rights and know-how related to tovorafenib. This transaction included the assignment of an exclusive license agreement with Viracta Therapeutics, Inc. Day One made an upfront payment of $1 million in cash and issued Series A preferred stock as part of this deal.
The company's lead product, OJEMDA (tovorafenib), is an oral, brain-penetrant, highly selective type II rapidly accelerated fibrosarcoma (RAF) kinase inhibitor. OJEMDA was granted breakthrough therapy designation by the FDA in August 2020 for the treatment of relapsed or refractory pediatric low-grade glioma (pLGG) based on initial results from a Phase 1 trial showing evidence of rapid anti-tumor activity and durable responses in patients with pLGG. Additionally, tovorafenib received orphan drug designations from the FDA and EU for the treatment of malignant glioma and glioma, respectively.
In April 2024, the FDA approved OJEMDA for the treatment of patients 6 months of age and older with relapsed or refractory pLGG harboring a BRAF fusion or rearrangement, or BRAF V600 mutation. The approval was based on data from the company's pivotal Phase 2 FIREFLY-1 trial, which demonstrated an overall response rate of 51% in the 76 evaluable patients. The median duration of response was 13.8 months, and 66% of patients remained on study and continued treatment as of the June 2023 data cutoff. The safety profile was generally manageable, with the most common adverse events including rash, hair color changes, fatigue, and viral infection.
Following the approval, Day One launched OJEMDA in the United States in May 2024. OJEMDA is the only systemic therapy for pLGG that offers once-weekly dosing, with or without food, as a tablet or oral suspension. The company also entered into an exclusive licensing agreement with Ipsen Pharma SAS in July 2024 for the commercialization of OJEMDA outside the United States, further expanding the product's global reach.
In addition to OJEMDA, Day One has a robust pipeline of product candidates, including:
1. DAY301: A clinical-stage antibody-drug conjugate (ADC) targeting PTK7 in solid tumors. Day One licensed the exclusive worldwide rights to develop, manufacture and commercialize DAY301, excluding Greater China, from MabCare Therapeutics in June 2024. The company expects to dose the first patient in the Phase 1a portion of the Phase 1ab study for DAY301 in Q4 2024 or Q1 2025.
2. VRK1: An earlier-stage program targeting Vaccinia Related Kinase 1, a novel target involved in the regulation of cell division and DNA damage repair. Day One licensed the exclusive, worldwide rights to research, develop, and commercialize VRK1-related products from Sprint Bioscience AB in August 2023. Preclinical research activities to advance the VRK1 program are ongoing.
The company also has an ongoing pivotal Phase 3 FIREFLY-2 trial evaluating tovorafenib as a frontline therapy in pLGG patients.
Financial Performance and Ratios:
For the full year 2024, Day One reported total revenues of $131.2 million, including $57.2 million in net product revenues from the sale of OJEMDA, which was launched in May 2024, and $73.9 million in license revenue from the Ipsen agreement. The company ended the year with $531.7 million in cash, cash equivalents, and short-term investments, providing a strong financial foundation to support its ongoing operations and pipeline development.
Financials:
Key financial ratios for Day One as of the end of 2024 include:
- Current Ratio: 7.66
- Quick Ratio: 7.61
- Cash Ratio: 1.70
- Debt Ratio: 0.45%
- Debt-to-Equity Ratio: 0.52%
- Return on Assets: -16.39%
- Return on Equity: -22.99%
As of September 30, 2024, the company reported:
- Debt/Equity ratio: 0.005
- Cash and cash equivalents: $422.76 million
- Current ratio: 7.66
- Quick ratio: 7.61
Liquidity:
These ratios demonstrate Day One's robust financial position, with ample liquidity and a low debt burden, positioning the company to continue investing in its pipeline and commercial operations.
Quarterly Performance:
In the fourth quarter of 2024, Day One reported:
- Revenue: $29.208 million
- Net income: -$65.714 million
- Operating Cash Flow (OCF): -$30.008 million
- Free Cash Flow (FCF): -$31.427 million
The negative net income, OCF, and FCF are due to the early commercialization efforts and ongoing clinical development programs. The company is investing significantly in the launch and commercialization of OJEMDA.
For the full year 2024, Day One reported net product revenues of $57.2 million from OJEMDA. In the fourth quarter, net product revenues reached $29.0 million, representing a 44% increase over the prior quarter. This strong quarterly performance was driven by continued growth in new patient starts and high on-label patient continuations, as well as improvements in the product's gross-to-net ratio.
During the nine months ended September 30, 2024, OJEMDA generated $28.26 million in net product revenue for Day One. The company currently only sells OJEMDA in the United States.
Outlook and Priorities:
Looking ahead to 2025, Day One has outlined three key priorities to build on its strong foundation:
- Continue driving growth in OJEMDA revenues by expanding the prescriber and patient base.
- Advance the company's pipeline, including continued enrollment in the FIREFLY-2 trial and dose escalation in the DAY301 Phase 1 trial.
- Expand the pipeline further through the acquisition and in-licensing of additional programs with first or best-in-class potential.
The company believes it is well-positioned to execute on these priorities, given its strong commercial capabilities, robust financial position, and proven ability to identify and acquire promising assets.
In terms of specific guidance:
- Day One expects the FIREFLY-2 trial, their Phase III frontline pLGG trial, to be fully enrolled in the first half of 2026.
- For OJEMDA's gross-to-net, they believe it will be approximately 12% to 15% for the foreseeable future, absent any change in their payer mix.
Risks and Challenges:
As with any biopharmaceutical company, Day One faces several risks and challenges, including:
- Potential delays or setbacks in the clinical development of its pipeline candidates
- The ability to maintain and expand the commercial success of OJEMDA
- Competition from other therapies, both approved and in development
- Reliance on third-party manufacturers and suppliers
- Regulatory hurdles and the ability to obtain and maintain necessary approvals
- Potential reimbursement and pricing challenges
The company will need to navigate these risks effectively to continue its growth trajectory and deliver on its mission of providing life-changing therapies to patients.
Conclusion:
Day One Biopharmaceuticals has emerged as a promising commercial-stage oncology company with a differentiated product in OJEMDA and a robust pipeline of potential best-in-class and first-in-class product candidates. The company's strong financial position, proven execution capabilities, and innovative approach to drug development position it well to continue delivering value for patients and shareholders in the years to come. With the successful launch of OJEMDA and ongoing development of additional pipeline assets, Day One is well-positioned to address significant unmet needs in pediatric and adult oncology, particularly in genomically-defined cancers where targeted therapies can make a meaningful difference in patient outcomes.