UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 | (I.R.S. Employer |
(Address of principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: | ||||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
|
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.
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).
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.
Large accelerated filer ☐ | 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 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
The number of shares of the registrant’s Series A common stock, $0.0001 par value per share, outstanding at November 8, 2024 was
Table of Contents
PART I - FINANCIAL INFORMATION |
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Condensed Statements of Operations and Comprehensive Loss (unaudited) | 6 | ||
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10 | |||
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 20 | ||
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2
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this Quarterly Report) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations and financial position, business strategy, drug candidates, planned preclinical studies and clinical trials, results of preclinical studies, clinical trials, research and development costs, regulatory approvals, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that are in some cases beyond our control and may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report include, but are not limited to, statements about:
• | our financial performance; |
• | our ability to obtain additional cash and the sufficiency of our existing cash, cash equivalents and marketable securities to fund our future operating expenses and capital expenditure requirements; |
• | the accuracy of our estimates regarding expenses, future revenue, capital requirements, and needs for additional financing; |
• | the scope, progress, results and costs of developing denifanstat or any other drug candidates we may develop, and conducting preclinical studies and clinical trials; |
• | our ability to advance drug candidates into, and successfully complete, clinical trials within anticipated timelines, including our planned Phase 3 clinical trials of denifanstat; |
• | the timing and costs involved in obtaining and maintaining regulatory approval of denifanstat or any other drug candidates we may develop, and the timing or likelihood of regulatory filings and approvals, including our expectation to seek special designations or accelerated approvals for our drug candidates for various indications; |
• | current and future agreements with third parties in connection with the development and commercialization of denifanstat or any other future drug candidate; |
• | our estimate of the number of patients in the United States who suffer from the diseases we target, including metabolic dysfunction-associated steatohepatitis (MASH), formerly known as nonalcoholic steatohepatitis (NASH), and the number of subjects that will enroll in our clinical trials; |
• | our relationship with Ascletis BioScience Co. Ltd. (Ascletis), and its affiliate Gannex Pharma Co., Ltd. (Gannex), and the success of their development efforts for denifanstat; |
• | the ability of our clinical trials to demonstrate the safety and efficacy of denifanstat and any other drug candidates we may develop, and other positive results; |
• | our plans relating to commercializing denifanstat and any other drug candidates we may develop, if approved, including the geographic areas of focus and our ability to grow a sales team; |
• | the success of competing therapies that are or may become available; |
• | developments relating to our competitors and our industry, including competing drug candidates and therapies; |
3
• | our plans relating to the further development and manufacturing of denifanstat and any other drug candidates we may develop, including additional indications that we may pursue for denifanstat or other drug candidates; |
• | existing regulations and regulatory developments in the United States and other jurisdictions; |
• | our potential and ability to successfully manufacture and supply denifanstat and any other drug candidates we may develop for clinical trials and for commercial use, if approved; |
• | the rate and degree of market acceptance of denifanstat and any other drug candidates we may develop, as well as the pricing and reimbursement of denifanstat and any other drug candidates we may develop, if approved; |
• | our expectations regarding our ability to obtain, maintain, protect and enforce intellectual property protection for denifanstat and for any other future drug candidate; |
• | our ability to realize the anticipated benefits of any strategic transactions; |
• | our ability to attract and retain the continued service of our key personnel and to identify, hire, and then retain additional qualified personnel and our ability to attract additional collaborators with development, regulatory and commercialization expertise; |
• | the impact of macroeconomic conditions and geopolitical turmoil on our business and operations; |
• | our expectations regarding the period during which we will qualify as an emerging growth company under the JOBS Act; and |
• | our anticipated use of our existing cash, cash equivalents and marketable securities. |
We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we believe may affect our business, financial condition, results of operations and prospects, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of risks, uncertainties and assumptions described in Part II, Item 1A. “Risk Factors” and elsewhere in this Quarterly Report. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein until after we distribute this Quarterly Report, whether as a result of any new information, future events or otherwise.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely upon these statements.
Explanatory Note
Reflecting the change in disease nomenclature from non-alcoholic fatty liver disease (NAFLD) to metabolic dysfunction-associated steatotic liver disease (MASLD) and from nonalcoholic steatohepatitis (NASH) to metabolic dysfunction-associated steatohepatitis (MASH), we are using MASLD and MASH throughout this document other than when referring to titles of publications or other activities that utilized the term NAFLD or NASH.
4
PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
SAGIMET BIOSCIENCES INC.
CONDENSED BALANCE SHEETS
(unaudited)
(in thousands, except for share and per share amounts)
As of | ||||||
September 30, | December 31, | |||||
| 2024 |
| 2023 | |||
Assets | ||||||
Current assets: |
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Cash and cash equivalents | $ | | $ | | ||
Short-term marketable securities |
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Prepaid expenses and other current assets | | | ||||
Total current assets | | | ||||
Long-term marketable securities | | — | ||||
Operating lease right-of-use assets | | | ||||
Total assets | $ | | $ | | ||
Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable | $ | | $ | | ||
Accrued expenses and other current liabilities (includes |
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Operating lease liabilities |
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Total current liabilities |
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Commitments and contingencies (Note 6) |
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Stockholders’ equity: |
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Undesignated preferred stock, $ | ||||||
Series A common stock, $ | | | ||||
Series B common stock, $ | ||||||
Additional paid-in capital |
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Accumulated deficit |
| ( |
| ( | ||
Accumulated other comprehensive income |
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Total stockholders’ equity | |
| | |||
Total liabilities and stockholders’ equity | $ | | $ | |
The accompanying notes are an integral part of these unaudited condensed financial statements.
5
SAGIMET BIOSCIENCES INC.
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited)
(in thousands, except for share and per share amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2024 |
| 2023 |
| 2024 |
| 2023 | ||||||
$ | — | $ | | $ | — | $ | | |||||
Operating expenses: | ||||||||||||
Research and development | | | | | ||||||||
General and administrative |
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Total operating expenses |
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Loss from operations |
| ( |
| ( |
| ( |
| ( | ||||
Other income (expense): | ||||||||||||
Change in fair value of redeemable convertible preferred stock warrant liability | — | — | — | ( | ||||||||
Change in fair value of Series A common stock warrant liability | — | | — | | ||||||||
Interest income and other, net | | | | | ||||||||
Total other income |
| |
| |
| |
| | ||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Net loss per share of Series A and Series B common stock outstanding, basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Weighted-average shares of Series A and Series B common stock outstanding, basic and diluted |
| |
| | |
| | |||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Other comprehensive income: |
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Net unrealized income on marketable securities |
| |
| — |
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Total comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( |
The accompanying notes are an integral part of these unaudited condensed financial statements.
6
SAGIMET BIOSCIENCES INC.
CONDENSED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS’ EQUITY (DEFICIT)
(unaudited)
(in thousands, except share amounts)
Accumulated | |||||||||||||||||||||||||
Series A | Series B | Additional | Other | Total | |||||||||||||||||||||
Common Stock |
|
| Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||
| Shares |
| Amount |
|
| Shares |
| Amount |
| Capital |
| Deficit |
| Income (Loss) |
| Equity | |||||||||
Balance at January 1, 2024 | | $ | |
| | $ | — | $ | | $ | ( | $ | | $ | | ||||||||||
Sale of Series A common stock, net of issuance costs | | | — | — | | — | — | | |||||||||||||||||
Issuance of Series A common stock upon exercise of stock options | | — | — | — | | — | — | | |||||||||||||||||
Stock-based compensation expense |
| — |
| — |
| — |
| — |
| |
| — |
| — |
| | |||||||||
Unrealized loss on investments in marketable securities |
| — |
| — |
| — |
| — |
| — |
| — |
| ( |
| ( | |||||||||
Net loss |
| — |
| — |
| — |
| — |
| — |
| ( |
| — |
| ( | |||||||||
Balance at March 31, 2024 |
| | $ | |
| | $ | — | $ | | $ | ( | $ | | $ | | |||||||||
Issuance costs related to sale of Series A common stock | — | — | — | — | ( | — | — | ( | |||||||||||||||||
Stock-based compensation expense |
| — |
| — |
| — |
| — |
| |
| — |
| — |
| | |||||||||
Unrealized loss on investments in marketable securities |
| — |
| — |
| — |
| — |
| — |
| — |
| ( |
| ( | |||||||||
Net loss |
| — |
| — |
| — |
| — |
| — |
| ( |
| — |
| ( | |||||||||
Balance at June 30, 2024 |
| | $ | |
| | $ | — | $ | | $ | ( | $ | ( | $ | | |||||||||
Issuance of Series A common stock for vesting of restricted stock units |
| |
| — |
| — |
| — |
| — |
| — |
| — |
| — | |||||||||
Stock-based compensation expense | — | — | — | — | | — | — | | |||||||||||||||||
Unrealized gain on investments in marketable securities | — | — | — | — | — | — | | | |||||||||||||||||
Net loss | — | — | — | — | — | ( | — | ( | |||||||||||||||||
Balance at September 30, 2024 | | $ | |
| | $ | — | $ | | $ | ( | $ | | $ | |
7
Accumulated | |||||||||||||||||||||||||||||||||||||
Redeemable Convertible | Series A | Series B | Additional | Other | Total | ||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Common Stock | Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||||||||||||||
Shares |
| Amount |
|
| Shares |
| Amount |
| Shares |
| Amount | Shares |
| Amount | Capital |
| Deficit |
| Loss |
| Equity (Deficit) | ||||||||||||||||
Balance at January 1, 2023 |
| | $ | |
| | $ | | — | $ | — | — | $ | — | $ | | $ | ( | $ | ( | $ | ( | |||||||||||||||
Stock-based compensation expense |
| — |
| — |
| — |
| — | — | — | — | — |
| |
| — |
| — |
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Unrealized gain on investments in marketable securities |
| — |
| — |
| — |
| — | — | — | — | — |
| — |
| — |
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| | |||||||||||||||||
Net loss |
| |
| |
| — |
| — | — | — | — | — |
| — |
| ( |
| — | ( | ||||||||||||||||||
Balance at March 31, 2023 |
| | $ | |
| | $ | | — | $ | — | — | $ | — | $ | | $ | ( | $ | ( | $ | ( | |||||||||||||||
Exercise of common stock warrants |
| — |
| — |
| |
| — | — | — | — | — |
| — |
| — |
| — |
| — | |||||||||||||||||
Unrealized gain on investments in marketable securities | — | — | — | — | — | — | — | — | — | — | | | |||||||||||||||||||||||||
Stock-based compensation expense |
| — |
| — |
| — |
| — | — | — | — | — |
| |
| — |
| — |
| | |||||||||||||||||
Net loss |
| |
| |
| — |
| — | — | — | — | — |
| — |
| ( |
| — | ( | ||||||||||||||||||
Balance at June 30, 2023 |
| | $ | |
| | $ | | — | $ | — | — | $ | — | $ | | $ | ( | $ | — | $ | ( | |||||||||||||||
Conversion of redeemable convertible preferred stock to Series A and Series B common stock |
| ( | ( | — | — | | | | — | | — | — | | ||||||||||||||||||||||||
Reclass of common stock to Series A common stock | — | — | ( | ( | | | — | — | — | — | — | — | |||||||||||||||||||||||||
Sale of Series A common stock in public offering, net of issuance costs of $ | — | — | — | — | | — | — | — | | — | — | | |||||||||||||||||||||||||
Issuance of Series A common stock upon exercise of stock options | — | — | — | — | | — | — | — | | — | — | | |||||||||||||||||||||||||
Exercise of common stock warrants | — | — | — | — | | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Stock-based compensation expense |
| — | — | — | — | — | — | — | — | | — | — | | ||||||||||||||||||||||||
Net loss |
| — |
| |
| — |
| — | — |
| — | — |
| — |
| — |
| ( |
| — |
| ( | |||||||||||||||
Balance at September 30, 2023 |
| | $ | |
| — | $ | — | | $ | | | $ | — | $ | | $ | ( | $ | — | $ | |
The accompanying notes are an integral part of these unaudited condensed financial statements.
8
SAGIMET BIOSCIENCES INC.
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Nine Months Ended September 30, | ||||||
2024 | 2023 | |||||
Cash flows from operating activities |
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Net loss | $ | ( | $ | ( | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
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Accretion of discount on marketable securities |
| ( |
| ( | ||
Non-cash operating lease expense |
| |
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Stock-based compensation expense |
| |
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Change in fair value of redeemable convertible preferred stock warrant liability | — | | ||||
Change in fair value of Series A common stock warrant liability | — | ( | ||||
Changes in operating assets and liabilities: |
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|
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Prepaid expenses and other current assets |
| ( |
| ( | ||
Accounts payable, accrued expenses and other current liabilities |
| ( |
| ( | ||
Operating lease liabilities |
| ( |
| ( | ||
Net cash used in operating activities |
| ( |
| ( | ||
Cash flows from investing activities |
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Purchases of marketable securities | ( | — | ||||
Sales and maturities of marketable securities |
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Net cash (used in) provided by investing activities |
| ( |
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Cash flows from financing activities |
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Proceeds from sale of Series A common stock, net of issuance costs | | — | ||||
Proceeds from initial public offering, net of underwriters' commissions and discounts | — | | ||||
Payment of financing costs |
| ( |
| — | ||
Proceeds from exercise of stock options | | | ||||
Net cash provided by financing activities |
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Net increase in cash and cash equivalents |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period | $ | | $ | | ||
Supplemental non-cash investing and financing activities: | ||||||
Deferred financing costs included in accounts payable and accrued expenses | $ | | $ | — | ||
Right-of-use assets obtained in exchange for operating lease obligations | $ | | $ | — |
The accompanying notes are an integral part of these unaudited condensed financial statements.
9
SAGIMET BIOSCIENCES INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS (unaudited)
1. | Description of Business and Basis of Presentation |
Sagimet Biosciences Inc. (the Company), a Delaware corporation headquartered in San Mateo, California, is a clinical-stage biopharmaceutical company developing novel therapeutics called fatty acid synthase (FASN) inhibitors that target dysfunctional metabolic and fibrotic pathways in diseases resulting from the overproduction of the fatty acid, palmitate. The Company’s lead drug candidate, denifanstat, is an oral, once-daily pill and selective FASN inhibitor for the treatment of metabolic dysfunction-associated steatohepatitis (MASH), formerly known as nonalcoholic steatohepatitis (NASH). In January 2024, the Company announced positive topline results from the Phase 2b FASCINATE-2 clinical trial evaluating denifanstat in biopsy-confirmed MASH patients with stage F2 or F3 fibrosis compared to placebo at week 52. In June 2024, the Company presented additional 52-week intention to treat (ITT) and F3 subgroup efficacy data from the Phase 2b FASCINATE-2 clinical trial.
In October 2024, the U.S. Food and Drug Administration (FDA) granted Breakthrough Therapy designation to denifanstat for the treatment of non-cirrhotic MASH with moderate to advanced liver fibrosis (consistent with stages F2 to F3 fibrosis). Breakthrough Therapy designation of denifanstat was supported by positive data from the Phase 2b FASCINATE-2 clinical trial in biopsy-confirmed MASH patients with stage 2 or stage 3 fibrosis.
In October 2024, the Company completed successful end-of-Phase 2 interactions with the FDA, supporting the advancement of denifanstat into Phase 3 in MASH. The planned program will include two Phase 3 trials: FASCINATE-3, evaluating patients with F2/F3 (non-cirrhotic) MASH, and FASCINIT, evaluating patients with suspected or confirmed diagnosis of metabolic dysfunction-associated steatotic liver disease (MASLD)/MASH. The Phase 3 program is expected to initiate by the end of 2024.
In addition to MASH, the Company is exploring the use of its FASN inhibitors in acne and in select forms of cancer, diseases in which dysregulation of fatty acid metabolism also plays a key role. Denifanstat is currently being tested in China by the Company’s license partner, Ascletis BioScience Co. Ltd. (Ascletis), a subsidiary of Ascletis Pharma Inc. (Ascletis Pharma), in a Phase 3 clinical trial for moderate to severe acne vulgaris and a Phase 3 trial in recurrent glioblastoma multiforme (GBM) in combination with bevacizumab. In November 2024, Ascletis announced completion of enrollment of 480 patients in the acne Phase 3 clinical trial. The Company has completed Investigational New Drug (IND)-enabling studies for a second FASN inhibitor, TVB-3567.
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted (GAAP) in the United States. Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Updates (ASU) promulgated by the Financial Accounting Standards Board (FASB). Certain prior year amounts have been reclassified to conform to the current year presentation.
These unaudited interim financial statements and accompanying notes should be read in conjunction with the Company’s annual financial statements and the notes thereto included in the Company’s Form 10-K, as filed with the Securities and Exchange Commission (SEC) on March 25, 2024. The accompanying interim financial statements as of September 30, 2024 and for the three and nine months ended September 30, 2024 and 2023 are unaudited but include all adjustments that management believes to be necessary for a fair presentation of the periods presented. Interim results are not necessarily indicative of results for a full year. Balance sheet amounts as of December 31, 2023 have been derived from the audited financial statements as of that date.
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 as of the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Such estimates include accruals of research and development expenses, accrued costs for services rendered under agreements with third-party contract research organizations (CROs), preferred stock and common stock valuations prior to the Company’s initial public offering of Series A common stock (IPO) and stock option valuations and stock-based compensation. On an ongoing basis, the Company evaluates its estimates and judgments, which are based on historical and anticipated results and trends and on various other assumptions that management believes to be reasonable under the circumstances. Actual results could differ from those estimates.
10
Emerging growth company status
The Company is an emerging growth company (EGC) as defined in the Jumpstart Our Business Startups Acts of 2012, as amended (the JOBS Act), and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not EGCs. The Company may take advantage of these exemptions until it is no longer an EGC under Section 107 of the JOBS Act and has elected to use the extended transition period for complying with new or revised accounting standards. As a result of this election, the Company’s financial statements may not be comparable to those issued by companies that comply with the effective dates pursuant to public company FASB standards.
Liquidity
The accompanying unaudited financial statements have been prepared assuming the Company will continue as a going concern, which contemplates continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company will require substantial additional capital to fund its research and development and ongoing operating expenses. As of September 30, 2024, the Company has relied on public and private equity and debt financings and proceeds from licensing arrangements to fund its operations. The Company has incurred recurring losses and negative cash flows from operations since inception, and, as of September 30, 2024, had an accumulated deficit of $
In July and August 2023, the Company completed its IPO, and inclusive of the partial exercise of the underwriters’ overallotment option, the Company sold an aggregate of
The Company expects that its cash, cash equivalents and marketable securities as of September 30, 2024 will be sufficient to fund the Company’s operating expenses for at least the next 12 months from the issuance of these financial statements. In the future, the Company will need to raise additional funds until it is able to generate sufficient revenues to fund its development activities, if ever. The Company’s future operating activities, coupled with its plans to raise capital or issue debt financing, may provide additional liquidity in the future, however these actions are not solely within the control of the Company and the Company is unable to predict the outcome of these actions to generate the liquidity ultimately required.
In August 2024, the Company entered into a Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co. to establish an at-the-market offering (ATM Offering) through which the Company may sell, from time to time at its sole discretion up to $
2. | Significant Accounting Policies |
The Company’s significant accounting policies are disclosed in the audited financial statements and the notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on March 25, 2024. Since the date of those audited financial statements, there have been no material changes to the Company’s significant accounting policies.
11
Reverse stock split
A one-for-
reverse stock split of the Company’s issued and outstanding common stock was effected on July 7, 2023. Stockholders entitled to fractional shares as a result of the reverse stock split received a cash payment in lieu of receiving fractional shares. Accordingly, all share and per share amounts for all periods presented in the accompanying unaudited condensed financial statements and notes thereto have been retroactively adjusted, where applicable, to reflect the effects of the reverse stock split. Shares of common stock underlying outstanding stock options and common stock warrants were proportionately reduced and the respective exercise prices, if applicable, were proportionately increased in accordance with the terms of the agreements governing such securities. Shares of common stock reserved for issuance upon the conversion of the Company’s preferred stock were proportionately reduced and the respective conversion prices were proportionately increased.Net loss per share and reclassification of common stock
Basic and diluted net loss per share is computed using the two-class method required for multiple classes of common stock and participating securities. The Company’s participating securities do not have a contractual obligation to share in the Company’s losses. As such, the net loss was attributed entirely to common stockholders for all periods presented. Basic net loss per common share attributable to common stockholders is calculated by dividing the net loss by the weighted-average number of common shares outstanding during the period, without consideration of potentially dilutive securities. Diluted net loss per share attributable to common stockholders is computed by dividing the net loss by the weighted-average number of common shares and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss per share attributable to common stockholders calculation, common stock options, restricted stock units and common stock warrants are considered to be potentially dilutive securities. As the Company has reported a net loss for the periods presented, basic and diluted net loss per share attributable to common stockholders is the same as all potentially dilutive securities would have an anti-dilutive impact.
On July 18, 2023, each share of the Company’s common stock issued and outstanding became reclassified as one share of Series A common stock. Any stock certificate that immediately prior to July 18, 2023 represented shares of the Company’s common stock was deemed to represent shares of Series A common stock, without the need for surrender or exchange thereof. Additionally, in connection with the IPO, the Company’s outstanding redeemable convertible preferred stock automatically converted into
The following table presents the calculation of basic and diluted net loss per share for the three and nine months ended September 30, 2024 and 2023 (in thousands, except share and per share data):
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2024 | 2023 | 2024 |
| 2023 | ||||||||
Numerator: | ||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Denominator: | ||||||||||||
Weighted-average shares of Series A and Series B common stock outstanding, basic and diluted |
| |
| |
| |
| | ||||
Net loss per share of Series A and Series B common stock outstanding, basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( |
The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares of Series A and Series B common stock outstanding, as their effect would have been anti-dilutive:
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Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |
Options to purchase Series A common stock | | | | | ||||
Warrants to purchase Series A common stock | | | | | ||||
Unvested restricted stock units | | — | | — | ||||
Total |
| |
| |
| |
| |
Recently adopted accounting pronouncements
The Company considers the applicability and impact of all ASUs. ASUs not discussed below were assessed and either determined to be not applicable or expected to have minimal impact on the Company’s financial statements.
In August 2020, the FASB issued ASU No. 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40); Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which address issues identified as a result of the complexity associated with applying GAAP for certain financial instruments with characteristics of liabilities and equity. This amendment is effective for fiscal years beginning after December 15, 2023, including interim periods within. The adoption of this standard had no impact on the Company’s financial statements and related disclosures.
New accounting pronouncements not yet adopted
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures. ASU 2023-07 requires disclosure of incremental segment information on an interim and annual basis and provides new segment disclosure requirements for entities with a single reportable segment. ASU 2023-07 is effective for all public companies for fiscal years beginning after December 15, 2023, and interim periods within fiscal periods beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. The Company is assessing the impact of the adoption of this standard on its disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740)—Improvements to Income Tax Disclosures, a final standard on improvements to income tax disclosures. The standard requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions and applies to all entities subject to income taxes. The new standard is effective for annual periods beginning after December 15, 2024. The Company is assessing the impact of the adoption of this standard on its disclosures.
3. | Fair Value Measurements and Fair Value of Financial Instruments |
The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:
Level 1 - Quoted prices in active markets for identical assets or liabilities.
Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
As of September 30, 2024 and December 31, 2023, financial assets measured at fair value on a recurring basis consisted of cash equivalents and marketable securities. Cash equivalents consist primarily of money market funds and other investments that are readily convertible into cash and have maturities of three months or less at the time of acquisition. The fair value of cash equivalents was $
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securities was $
The Company evaluates securities with unrealized losses, if any, to determine whether the decline in fair value has resulted from credit loss or other factors, including various qualitative factors. As of September 30, 2024, the Company has not recognized any impairment or credit losses on the Company’s available for sale securities. While the Company classifies these securities as available for sale, the Company does not intend to sell its investments and based on its current plans, the Company currently believes it has the ability to hold these investments until maturity.
The carrying values of the Company’s accounts payable and accrued expenses and other current liabilities approximate their fair values due to the short-term nature of these liabilities.
Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.
The Company’s Level 3 liabilities that are measured at fair value on a recurring basis consist of the Series A common stock warrant liability related to the warrant to purchase
The following tables set forth the Company’s financial assets that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):
| September 30, 2024 | ||||||||||||||
Valuation |
| Amortized |
| Unrealized |
| Unrealized |
| ||||||||
Hierarchy | cost | Gains | Losses | Fair Value | |||||||||||
Assets | |||||||||||||||
Cash equivalents: | |||||||||||||||
Money market funds | Level 1 | $ | | $ | — | $ | — | $ | | ||||||
Total cash equivalents | | — | — | | |||||||||||
Short-term marketable securities: | |||||||||||||||
Commercial paper |
| Level 2 | |
| |
| — |
| | ||||||
Corporate debt securities | Level 2 | | | — | | ||||||||||
U.S. Treasury securities | Level 2 | | | — | | ||||||||||
Agency securities | Level 2 | | | — | | ||||||||||
Asset-backed securities | Level 2 | |