UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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:
(Exact Name of Registrant as Specified in its Charter)
( State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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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 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.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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.
Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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 August 12, 2024, the registrant had
Table of Contents
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Page |
PART I. |
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Item 1. |
1 |
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1 |
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2 |
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3 |
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4 |
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6 |
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7 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
28 |
Item 3. |
56 |
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Item 4. |
56 |
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PART II. |
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Item 1. |
57 |
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Item 1A. |
57 |
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Item 2. |
58 |
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Item 3. |
58 |
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Item 4. |
58 |
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Item 5. |
58 |
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Item 6. |
59 |
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60 |
i
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Taysha Gene Therapies, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(Unaudited)
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June 30, |
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December 31, |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash |
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Prepaid expenses and other current assets |
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Assets held for sale |
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Total current assets |
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Restricted cash |
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Property, plant and equipment, net |
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Operating lease right-of-use assets |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses and other current liabilities |
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Deferred revenue |
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Total current liabilities |
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Term loan, net |
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Operating lease liability, net of current portion |
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Other non-current liabilities |
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Total liabilities |
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Stockholders' equity |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive income |
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— |
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Accumulated deficit |
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( |
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Total stockholders’ equity |
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Total liabilities and stockholders' equity |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
Taysha Gene Therapies, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
(Unaudited)
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For the Three Months |
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For the Six Months |
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2024 |
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2023 |
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2024 |
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2023 |
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Revenue |
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$ |
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$ |
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$ |
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$ |
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Operating expenses: |
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Research and development |
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General and administrative |
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Total operating expenses |
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Loss from operations |
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Other income (expense): |
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Change in fair value of warrant liability |
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— |
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( |
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— |
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Change in fair value of term loan |
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( |
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— |
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— |
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Interest income |
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Interest expense |
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Other (expense) income |
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( |
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Total other income (expense), net |
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( |
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Net loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Net loss per common share, basic and diluted |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Weighted average common shares outstanding, basic and diluted |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
Taysha Gene Therapies, Inc.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands, except share and per share data)
(Unaudited)
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For the Three Months Ended June 30, |
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For the Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Net loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Other comprehensive income: |
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Change in fair value of terms loan attributable to instrument specific credit risk |
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— |
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— |
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Comprehensive loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
Taysha Gene Therapies, Inc.
Condensed Consolidated Statements of Stockholders’ (Deficit) Equity
(in thousands, except share data)
(Unaudited)
For the Three Months Ended June 30, 2024
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Additional |
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Accumulated |
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Total |
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Common Stock |
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Paid-in |
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Accumulated |
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Other |
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Stockholders' |
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Shares |
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Amount |
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Capital |
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Deficit |
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Comprehensive Loss |
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Deficit |
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Balance as of March 31, 2024 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Issuance of common stock and pre-funded warrants upon closing of underwritten public offering, net of underwriting discounts and commissions, and other offering costs of $ |
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— |
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— |
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— |
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Issuance of common stock upon exercise of stock options, net |
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— |
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— |
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— |
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Loss on instrument-specific credit risk |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
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— |
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( |
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Balance as of June 30, 2024 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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For the Three Months Ended June 30, 2023
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Additional |
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Accumulated |
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Total |
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Common Stock |
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Paid-in |
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Accumulated |
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Other |
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Stockholders' |
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Shares |
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Amount |
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Capital |
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Deficit |
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Comprehensive Loss |
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Equity |
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Balance as of March 31, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
— |
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$ |
( |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Issuance of common stock in private placement, net of offering costs of $ |
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— |
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— |
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— |
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Issuance of common stock upon vesting and settlement of restricted stock units |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Balance as of June 30, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
— |
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$ |
( |
) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
Taysha Gene Therapies, Inc.
Condensed Consolidated Statements of Stockholders’ (Deficit) Equity
(in thousands, except share data)
(Unaudited)
For the Six Months Ended June 30, 2024
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Additional |
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Common Stock |
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Paid-in |
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Accumulated |
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Accumulated Other |
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Total |
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Shares |
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Amount |
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Capital |
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Deficit |
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Comprehensive Loss |
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Stockholders' Equity |
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Balance as of December 31, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
— |
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$ |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Issuance of common stock and pre-funded warrants upon closing of underwritten public offering, net of underwriting discounts and commissions, and other offering costs of $ |
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— |
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— |
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— |
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Issuance of common stock upon vesting and settlement of restricted stock units |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock under ESPP |
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— |
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— |
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— |
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Issuance of common stock upon exercise of stock options |
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— |
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— |
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— |
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Gain on instrument-specific credit risk |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Balance as of June 30, 2024 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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For the Six Months Ended June 30, 2023
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Additional |
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Total |
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Common Stock |
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Paid-in |
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Accumulated |
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Accumulated Other |
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Stockholders' |
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Shares |
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Amount |
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Capital |
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Deficit |
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Comprehensive Loss |
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Equity (Deficit) |
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Balance as of December 31, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
— |
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$ |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Issuance of common stock in private placement, net of offering costs of $ |
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— |
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— |
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— |
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Issuance of common stock upon vesting and settlement of restricted stock units, net |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock under ESPP |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Balance as of June 30, 2023 |
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$ |
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$ |
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$ |
( |
) |
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$ |
— |
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$ |
( |
) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
Taysha Gene Therapies, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
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For the Six Months |
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2024 |
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2023 |
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Cash flows from operating activities |
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Net loss |
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$ |
( |
) |
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$ |
( |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation expense |
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Stock-based compensation |
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Research and development license expense |
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— |
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Change in fair value of warrant liability |
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— |
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Non-cash change in fair value of term loan |
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( |
) |
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— |
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Non-cash lease expense |
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Other |
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Changes in operating assets and liabilities: |
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Prepaid expenses and other assets |
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Accounts payable |
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Accrued expenses and other liabilities |
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( |
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( |
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Deferred revenue |
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( |
) |
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( |
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Net cash used in operating activities |
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( |
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( |
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Cash flows from investing activities |
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Purchase of property, plant and equipment |
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( |
) |
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( |
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Net cash used in investing activities |
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( |
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( |
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Cash flows from financing activities |
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Debt issuance costs for term loan |
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( |
) |
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— |
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Proceeds from issuance of common stock and pre-funded warrants from underwritten public offering, net of underwriting discounts and sales commissions and other offering costs |
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— |
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Proceeds from issuance of common stock from private placement |
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— |
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Payment of offering costs |
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— |
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( |
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Proceeds from common stock issuances under ESPP |
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Other |
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( |
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( |
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Net cash provided by financing activities |
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Net increase (decrease) in cash, cash equivalents and restricted cash |
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( |
) |
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Cash, cash equivalents and restricted cash at the beginning of the period |
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Cash, cash equivalents and restricted cash at the end of the period |
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$ |
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$ |
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Cash and cash equivalents |
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Restricted cash |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash at the end of the period |
|
$ |
|
|
$ |
|
||
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
||
Cash paid for interest |
|
$ |
|
|
$ |
|
||
Supplemental disclosure of noncash investing and financing activities: |
|
|
|
|
|
|
||
Issuance of warrants in connection with private placement |
|
|
— |
|
|
|
||
Research and development license not yet paid |
|
|
— |
|
|
|
|
|
Offering costs not yet paid |
|
|
|
|
|
— |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
Note 1—Organization and Description of Business Operations
Taysha Gene Therapies, Inc. (the “Company” or “Taysha”) was originally formed under the laws of the State of Texas on September 20, 2019. Taysha converted to a Delaware corporation on
Taysha is a clinical-stage biotechnology company focused on advancing AAV-based gene therapies for severe monogenic diseases of the central nervous system.
Sales Agreement
On October 5, 2021, the Company entered into a Sales Agreement (the “Sales Agreement”) with SVB Securities LLC (f/k/a SVB Leerink LLC) and Wells Fargo Securities, LLC (collectively, the “Sales Agents”), pursuant to which the Company may issue and sell, from time to time in its sole discretion, shares of its common stock having an aggregate offering price of up to $
Liquidity and Capital Resources
The Company has incurred operating losses since inception and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. Losses are expected to continue as the Company continues to invest in its research and development activities. As of June 30, 2024, the Company had an accumulated deficit of $
On June 26, 2024, the Company entered into an underwriting agreement (the “June 2024 Underwriting Agreement”) with Jefferies LLC and Goldman Sachs & Co. LLC, as representatives of the several underwriters set forth therein (collectively, the “Underwriters”), to issue and sell
Future capital requirements will depend on many factors, including the timing and extent of spending on research and development and the market acceptance of the Company’s products. The Company will need to obtain additional financing in order to complete clinical studies and launch and commercialize any product candidates for which it receives regulatory approval. There can be no assurance that such financing will be available or will be on terms acceptable to the Company. As of June 30, 2024, the Company had cash and cash equivalents of $
7
Note 2—Summary of Significant Accounting Policies
Basis of Presentation
The unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) as determined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X and are consistent in all material respects with those included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (“SEC”) on March 19, 2024 (the “2023 Annual Report”). In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. The condensed consolidated balance sheet as of December 31, 2023 is derived from audited financial statements, however, it does not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes in the Company’s 2023 Annual Report.
Principles of Consolidation
The accompanying interim condensed consolidated financial statements include the accounts of Taysha and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with GAAP 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 expenses during the reporting period. The most significant estimates and assumptions in the Company’s financial statements relate to the determination of the fair value of the common stock prior to the initial public offering (“IPO”) (as an input into stock-based compensation), estimating manufacturing accruals and accrued or prepaid research and development expenses, the measurement of impairment of long-lived assets, the valuation of the Trinity Term Loans that are carried at fair value and the allocation of consideration received in connection with the Astellas Transactions (as defined below). 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 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.
Significant Accounting Policies
There have been no changes in the Company’s significant accounting policies as disclosed in Note 2 to the audited consolidated financial statements included in the 2023 Annual Report.
Recently Adopted Accounting Pronouncements
There have been no significant changes in recently adopted accounting pronouncements from those disclosed in the section titled “Financial Statements and Supplementary Data” included in the 2023 Annual Report.
Recently Issued Accounting Pronouncements
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting – Improvements to Reportable Segment Disclosures, to improve segment disclosure requirements under ASC 280, Segment Reporting, through enhancing disclosures about significant segment expenses. The guidance requires entities to provide significant segment expenses that are regularly provided to the chief operating decision maker and other segment expenses included in each reported measure of segment profitability. The ASU also enhances interim segment reporting requirements by aligning interim disclosures with information that must be disclosed annually in accordance with ASC 280. The guidance is effective for annual periods beginning after December 15, 2023, and interim periods
8
beginning after December 15, 2024, applied retrospectively with early adoption permitted. The Company is still evaluating the impact this ASU will have on its consolidated financial statements and related disclosures.
Note 3—Fair Value Measurements
The Company’s financial instruments that are measured at fair value on a recurring basis consist of money market funds, the Trinity Term Loans, a success fee derivative liability and certain of the Company’s warrant liabilities.
The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy used to determine such fair values (in thousands):
|
June 30, 2024 |
|
|||||||||||||
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents – money market funds |
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
||
Total assets |
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
||||
Trinity Term Loans |
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Success Fee Derivative liability |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
SSI Warrant liability |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total liabilities |
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
December 31, 2023 |
|
|||||||||||||
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents – money market funds
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
||
Total assets |
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
||||
Trinity Term Loans |
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Success Fee Derivative liability |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
SSI Warrant liability |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total liabilities |
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
The Company classifies its money market funds, which are valued based on quoted market prices in an active market with no valuation adjustment, as Level 1 assets within the fair value hierarchy.
The Company’s Trinity Term Loans and Success Fee liability are classified as Level 3 measurements under the fair value hierarchy as the fair values were determined based on significant inputs not observable in the market. The fair values were determined utilizing a probability-weighted income approach, including variables for the timing of a success event and other probability estimates. See Note 7 for additional information on the Trinity Term Loans and Success Fee.
The Company’s SSI Warrant liability is classified as Level 3 measurements under the fair value hierarchy as the fair values were determined based on significant inputs not observable in the market. The fair values were determined using the Black-Scholes-Merton option pricing model to determine the fair value of the SSI Warrants (as defined below). See Note 10 for additional information on the SSI Warrants.
9
Note 4—Balance Sheet Components
Prepaid expenses and other current assets consisted of the following (in thousands):
|
|
June 30, |
|
|
December 31, |
|
||
Prepaid research and development |
|
$ |
|
|
$ |
|
||
Prepaid clinical trial |
|
|
|
|
|
|
||
Deferred offering costs |
|
|
|
|
|
|
||
Prepaid insurance |
|
|
|
|
|
|
||
Prepaid bonus |
|
|
|
|
|
— |
|
|
Other |
|
|
|
|
|
|
||
Total prepaid expenses and other current assets |
|
$ |
|
|
$ |
|
Property, plant and equipment, net consisted of the following (in thousands):
|
|
June 30, |
|
|
December 31, |
|
||
Leasehold improvements |
|
$ |
|
|
$ |
|
||
Laboratory equipment |
|
|
|
|
|
|
||
Computer equipment |
|
|
|
|
|
|
||
Furniture and fixtures |
|
|
|
|
|
|
||
Construction in progress |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
Property, plant and equipment, net |
|
$ |
|
|
$ |
|
Property, plant and equipment, net includes $
Depreciation expense was $
Accrued expenses and other current liabilities consisted of the following (in thousands):
|
|
June 30, |
|
|
December 31, |
|
||
Accrued research and development |
|
$ |
|
|
$ |
|
||
Accrued compensation |
|
|
|
|
|
|
||
Accrued clinical trial |
|
|
|
|
|
|
||
Lease liabilities, current portion |
|
|
|
|
|
|
||
Accrued professional and consulting fees |
|
|
|
|
|
|
||
Warrant liability |
|
|
|
|
|
|
||
Accrued severance |
|
|
— |
|
|
|
|
|
Other |
|
|
|
|
|
|
||
Total accrued expenses and other current liabilities |
|
$ |
|
|
$ |
|
Note 5— Leases
The Company leases certain office, laboratory, and manufacturing space.
Dallas Lease
On January 11, 2021, the Company entered into a lease agreement (the “Dallas Lease”) with Pegasus Park, LLC, a Delaware limited liability company (the “Dallas Landlord”), pursuant to which the Company leases approximately
10
The Dallas Lease commenced on
The Dallas Landlord has the right to terminate the Dallas Lease, or the Company’s right to possess the Office Space without terminating the Dallas Lease, upon specified events of default, including the Company’s failure to pay rent in a timely manner and upon the occurrence of certain events of insolvency with respect to the Company.
Dallas Lease Expansion
On December 14, 2021, the Company amended the Dallas Lease (the “Dallas Lease Amendment”) with the Dallas Landlord, pursuant to which the Company leases approximately
The Dallas Lease Amendment commenced on July 1, 2022, and has a term of approximately
The Company is obligated to pay operating costs and utilities applicable to the Expansion Premises. Total future minimum lease payments under the Dallas Lease Amendment over the initial
The Company has a right of first refusal with respect to certain additional office space on the 15th floor at 3000 Pegasus Park Drive, Dallas, Texas 75247 before the Dallas Landlord accepts any offer for such space.
Durham Lease
On December 17, 2020, the Company entered into a lease agreement (the “Durham Lease”) with Patriot Park Partners II, LLC, a Delaware limited liability company (the “Durham Landlord”), pursuant to which the Company agreed to lease approximately
The Company was not required to provide a security deposit in connection with its entry into the Durham Lease. The Company was responsible for constructing interior improvements within the Facility. The Company was required to place $
Summary of all lease costs recognized under ASC 842
The following table summarizes the lease costs recognized under ASC 842 and other information pertaining to the Company’s operating leases for the three and six months ended June 30, 2024 and 2023 (in thousands):
|
Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
|||||||||
|
2024 |
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Operating lease cost |
$ |
|
$ |
|
|
$ |
|
|
$ |
|
||||
Variable lease cost |
|
|
|
|
|
|
|
|
|
|
||||
Total lease cost |
$ |