On May 6, Fusion announced that it has entered a clinical trial collaboration with a subsidiary of Merck to evaluate FPI-1434 in combination with Merck’s anti-PD-1 (programmed death receptor-1) therapy, KEYTRUDA^® (pembrolizumab), in patients with solid tumors expressing insulin-like growth factor 1 receptor (IGF-1R). The planned Phase 1 combination trial will evaluate safety, tolerability and pharmacokinetics of the combination and is expected to initiate approximately six to nine months after achieving the recommended Phase 2 dose in the ongoing Phase 1 study of FPI-1434 monotherapy. Under the terms of the agreement, Fusion will sponsor the study and Merck will supply KEYTRUDA.

On April 10, Fusion announced the presentation of preclinical data at the 2021 AACR Virtual Annual Meeting. The posters, titled “Combination of IGF-1R Targeted Alpha Therapy with Olaparib Results in Synergistic Efficacy Against Colorectal and Lung Cancer Xenografts” and “Combination of IGF-1R Targeted Alpha Therapy with Checkpoint Inhibitors Results in Synergistic Efficacy in Colorectal Cancer Syngeneic Model,” highlight the potential of Fusion’s targeted alpha therapies (TATs) as both monotherapies and combination therapies.

On April 1, Fusion announced the closing of its acquisition of Ipsen’s assets and intellectual property related to IPN-1087. IPN-1087, previously studied in a Phase 1 trial, is a small molecule targeting NTSR1, a protein expressed on multiple solid tumor types. Fusion is using IPN-1087 to create a first-in-class alpha-emitting radiopharmaceutical, FPI-2059, targeting solid tumors expressing NTSR1. The Company expects to submit an IND application in the first half of 2022.

Fusion continues to advance the multi-dose portion of its Phase 1 study evaluating FPI-1434 in patients with advanced solid tumors. The dose-finding study is enrolling patients at sites in Canada, the United States and Australia.

Fusion anticipates reporting Phase 1 multi-dose safety and imaging data, and the recommended Phase 2 dose and schedule, in the first half of 2022.

Fusion has evaluated FPI-1434 in preclinical studies in combination with approved checkpoint and DNA damage response inhibitors, including PARP inhibitors, and believes the synergies observed could expand the addressable patient populations for FPI-1434 and allow for potential use in earlier lines of treatment.

As noted above, Fusion anticipates the initiation of a Phase 1 combination study with FPI-1434 and KEYTRUDA^® (pembrolizumab) to occur six to nine months following determination of the recommended Phase 2 dose of FPI-1434 monotherapy.

FPI-1966 is designed to target and deliver actinium-225 to tumors expressing FGFR3, a protein that is overexpressed in head and neck and bladder cancers. Following the completion of pre-clinical studies, the Company expects to submit an IND for FPI-1966 in the second quarter of 2021.

Cash and Investments: As of March 31, 2021, Fusion held cash, cash equivalents and investments of $278.2 million, compared to cash of $299.5 million as of December 31, 2020. Fusion expects its cash, cash equivalents and investments as of March 31, 2021 will enable the Company to fund its operations through the end of 2023.

R&D Expenses: Research and development expenses for the first quarter of 2021 were $10.7 million, compared to $4.4 million for the same period in 2020. The increase was primarily related to increased platform development and research activities, clinical activities related to the ongoing Phase 1 clinical trial of FPI-1434, and preclinical research and manufacturing costs.

G&A Expenses: General and administrative expenses for the first quarter of 2021 were $7.0 million, compared to $4.3 million for the same period in 2020. The increase was primarily related to general corporate expenses, including increased professional and consulting fees as a result of public company activities, as well as increased salaries, benefits and stock compensation costs due to hiring.

Net Loss: For the first quarter of 2021, Fusion reported a net loss of $17.5 million, or $0.42 per share, compared with a net loss attributable to common shareholders of $11.6 million, or $6.01 per share, for the same period in 2020. On a non-GAAP basis, excluding a change in fair value of preferred share tranche right liability and warrant liability, net loss was $8.8 million for the first quarter of 2020.

Assets

Current assets:

Cash and cash equivalents

Short-term investments

Prepaid expenses and other current assets

Restricted cash

Total current assets

Property and equipment, net

Deferred tax assets

Restricted cash

Long-term investments

Operating lease right-of-use assets

Other non-current assets

Total assets

Liabilities and Shareholders’ Equity

Current liabilities:

Accounts payable

Accrued expenses

Income taxes payable

Deferred revenue

Operating lease liabilities

Total current liabilities

Deferred rent, net of current portion

Income taxes payable, net of current portion

Deferred revenue, net of current portion

Operating lease liabilities, net of current portion

Total liabilities

Commitments and contingencies

Shareholders’ equity:

Common shares, no par value, unlimited shares authorized as of March 31, 2021 and December 31, 2020; 41,845,181 and 41,725,797 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively

Additional paid-in capital

Accumulated other comprehensive income

Accumulated deficit

Total shareholders’ equity

Total liabilities and shareholders’ equity

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Other income (expense):

Change in fair value of preferred share tranche right liability

Change in fair value of preferred share warrant liability

Interest income (expense), net

Refundable investment tax credits

Other income (expense), net

Total other income (expense), net

Loss before (provision) benefit for income taxes

Income tax (provision) benefit

Net loss

Unrealized gain on investments

Comprehensive loss

Reconciliation of net loss to net loss attributable to common shareholders:

Net loss

Dividends paid to preferred shareholders in the form of warrants issued

Net loss attributable to common shareholders

Net loss per share attributable to common shareholders—basic and diluted

Weighted-average common shares outstanding—basic and diluted

Cash flows from operating activities:

Net loss

Adjustments to reconcile net loss to net cash used in operating activities:

Share-based compensation expense

Depreciation and amortization expense

Non-cash lease expense

Change in fair value of preferred share tranche right liability

Change in fair value of preferred share warrant liability

Amortization of premiums (accretion of discounts) on investments, net

Foreign exchange gain

Changes in operating assets and liabilities:

Prepaid expenses and other current assets

Other non-current assets

Accounts payable

Accrued expenses

Income taxes payable

Operating lease liabilities

Net cash used in operating activities

Cash flows from investing activities:

Purchases of investments

Maturities of investments

Purchases of property and equipment

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from issuance of Class B convertible preferred shares and Class B preferred share tranche right, net of issuance costs

Proceeds from issuance of common shares upon exercise of stock options

Net cash provided by financing activities

Effect of exchange rate fluctuations on cash and cash equivalents held

Net (decrease) increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

Cash, cash equivalents and restricted cash at end of period

Supplemental disclosure of cash flow information:

Cash paid for income taxes

Right-of-use assets obtained in exchange for new operating lease liability

Supplemental disclosure of non-cash investing and financing activities:

Purchases of property and equipment included in accounts payable and accrued expenses

Issuance of warrants to purchase Class B preferred shares and Class B preferred

exchangeable shares as a non-cash dividend to preferred shareholders

Deferred offering costs included in accounts payable and accrued expenses

GAAP Net loss

Less: Adjustments

Change in fair value of preferred share tranche right liability

Change in fair value of preferred share warrant liability

Non-GAAP Net loss