UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
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 No.
(Exact Name of Registrant as Specified in its Charter)
(State or Other Jurisdiction of |
(I.R.S. Employer |
Incorporation or Organization) |
Identification No.) |
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(Address of Principal Executive Offices) |
(Zip Code) |
Registrant’s telephone number, including area code:
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
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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, 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 |
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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 Act). Yes ☐ No
The number of shares of Registrant’s Common Stock, $0.001 par value per share, outstanding as of November 8, 2024 was
INDEX TO FORM 10-Q
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5 |
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Item 1. |
5 |
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Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023 |
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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 |
18 |
Item 3. |
28 |
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Item 4. |
28 |
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29 |
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Item 1. |
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Item 1A. |
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Item 2. |
80 |
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Item 3. |
80 |
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Item 4. |
80 |
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Item 5. |
80 |
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Item 6. |
81 |
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2
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements (including within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”)) about us and our industry that involve substantial risks and uncertainties. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial condition, or otherwise, based on current beliefs of our management, as well as assumptions made by, and information currently available to, our management. Forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as “may,” “will,” “should,” “would,” “could,” “expect,” “anticipate,” “plan,” “likely,” “believe,” “estimate,” “intend,” and other similar expressions. Statements that are not historical facts are forward-looking statements. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties and are not guarantees of future performance. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation: our strategies, prospects, plans, expectations or objectives for future operations; the progress, scope or timing of the development of our product candidates; the benefits that may be derived from any future products or the commercial or market opportunity with respect to any of our future products; our ability to protect our intellectual property rights; our anticipated operations, financial position, ability to raise capital to fund operations, revenues, costs or expenses; statements regarding future economic conditions or performance; statements of belief and any statement of assumptions underlying any of the foregoing. These risks and uncertainties include, but are not limited to, the risks included in this Quarterly Report on Form 10-Q under Part II, Item 1A, “Risk Factors.” Other sections of this Quarterly Report on Form 10-Q, as well as our other disclosures and filings, include additional factors that could harm our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ from those contained in, or implied by, any forward-looking statements.
Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our estimates and assumptions only as of the date of this document. You should read this document with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we do not undertake any obligation to update or revise any forward-looking statements contained in this report, whether as a result of new information, future events or otherwise.
Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
3
You should read this Quarterly Report on Form 10-Q as well as the documents that we reference in, and have filed as exhibits to, this report with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
Unless the context suggests otherwise, references in this Quarterly Report on Form 10-Q to “Tempest,” “the Company,” “we,” “us,” and “our” refer to Tempest Therapeutics, Inc. and, where appropriate, its subsidiaries.
4
PART I – FINANCIAL INFORMATION
Item 1 – Financial Statements
TEMPEST THERAPEUTICS, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)
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September 30, 2024 |
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December 31, 2023 |
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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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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment — net |
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Operating lease right-of-use assets |
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Other noncurrent 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 |
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Current loan payable (net of discount and issuance costs of $ |
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Current operating lease liabilities |
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Accrued compensation |
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Interest payable |
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Total current liabilities |
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Loan payable (net of discount and issuance costs of |
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Operating lease liabilities, less current portion |
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Total liabilities |
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Stockholders’ equity: |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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( |
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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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See accompanying Notes to the Condensed Consolidated Financial Statements
5
TEMPEST THERAPEUTICS, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands, except share and per share amounts)
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Three Months Ended September 30, |
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Nine Months Ended September 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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Operating expenses: |
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Research and development |
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$ |
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$ |
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$ |
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$ |
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General and administrative |
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Loss from operations |
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( |
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( |
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( |
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( |
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Other income (expense), net: |
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Interest expense |
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( |
) |
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( |
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( |
) |
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( |
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Interest income and other income (expense), net |
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Total other income (expense), net |
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( |
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( |
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Provision for income taxes |
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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 share of common stock, RSUs and pre-funded warrants, 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 shares of common stock, RSUs and pre-funded warrants outstanding, basic and diluted |
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See accompanying Notes to the Condensed Consolidated Financial Statements
6
TEMPEST THERAPEUTICS, INC.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(in thousands, except share amounts)
Nine Months Ended September 30, 2024
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Common Stock |
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Additional |
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Accumulated |
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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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Equity |
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BALANCE — December 31, 2023 |
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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 connection with at-the-market offering (net of issuance costs of $ |
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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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Issuance of common stock under equity plan awards |
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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 — March 31, 2024 |
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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 connection with at-the-market offering (net of issuance costs of $ |
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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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Issuance of common stock under equity plan awards |
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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 — June 30, 2024 |
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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 connection with at-the-market offering (net of issuance costs of $ |
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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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Issuance of common stock under equity plan awards |
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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 — September 30, 2024 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Nine Months Ended September 30, 2023
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Common Stock |
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Additional |
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Accumulated |
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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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Equity |
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BALANCE — December 31, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
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Issuance of common stock for cash |
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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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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 — March 31, 2023 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Issuance of common stock for cash (net of issuance cost of $ |
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— |
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Exercise of pre-funded warrants |
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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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Exercise of stock options |
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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 — June 30, 2023 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Issuance of common stock for cash |
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— |
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— |
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Exercise of pre-funded warrants |
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— |
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— |
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Share-based compensation |
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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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( |
) |
BALANCE — September 30, 2023 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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See accompanying Notes to the Condensed Consolidated Financial Statements.
7
TEMPEST THERAPEUTICS, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
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For the Nine Months |
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2024 |
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2023 |
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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 expense |
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Non-cash lease expense |
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Non-cash interest and other expense, net |
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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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Interest payable |
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( |
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Operating lease liabilities |
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( |
) |
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( |
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Cash used in operating activities |
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( |
) |
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( |
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Investing activities: |
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Purchase of property and equipment |
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( |
) |
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( |
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Cash used in investing activities |
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( |
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( |
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Financing activities: |
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Proceeds from the issuance of common stock in connection with at-the-market offering, net of issuance costs |
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Repayment of loan |
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( |
) |
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— |
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Proceeds from the issuance of common stock under equity plan awards |
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— |
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Cash provided by financing activities |
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Net decrease in cash, cash equivalents and restricted cash |
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( |
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( |
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Cash, cash equivalents and restricted cash at beginning of period |
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Cash, cash equivalents and restricted cash at end of period |
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$ |
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$ |
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Supplemental disclosure of cash flow information: |
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Cash paid for interest |
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$ |
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$ |
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Cash paid for business taxes |
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$ |
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$ |
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Property and equipment in accounts payable |
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$ |
— |
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$ |
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See accompanying Notes to the Condensed Consolidated Financial Statements
8
TEMPEST THERAPEUTICS, INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
(Amounts are in thousands, except share and per share data)
1. ORGANIZATION AND DESCRIPTION OF THE BUSINESS
Description of Business
Tempest Therapeutics, Inc. (“Tempest” or the “Company”) is a clinical-stage biotechnology company moving into late-stage development with a diverse portfolio of targeted and immune-mediated product candidates with the potential to be first-in-class treatments for a wide range of cancers. Tempest’s novel programs range from early research to the lead program, amezalpat (previously known as TPST-1120), that is poised to begin a pivotal study in first-line liver cancer. Tempest is also developing other potential product candidates in its Discovery Research group. The Company is headquartered in Brisbane, California.
Liquidity and Management Plans
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company has incurred operating losses since inception. As of September 30, 2024, the Company had cash and cash equivalents of $
ATM Program
On July 23, 2021, the Company entered into a sales agreement with Jefferies LLC (“Jefferies”), pursuant to which the Company may sell, from time to time at its sole discretion through Jefferies, as its sales agent, shares of its common stock having, up to an aggregate sales price of $
9
PIPE Financing
On April 29, 2022, the Company completed a private investment in public equity (“PIPE”) financing from the sale of
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Significant Accounting Policies—The Company’s significant accounting policies are described in Note 2, “Summary of Significant Accounting Policies,” in the Company’s Annual Report on Form 10-K filed with the SEC on March 19, 2024. There have been no material changes to the significant accounting policies during the period ended September 30, 2024.
Basis of Presentation—The unaudited interim Condensed Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been omitted. These unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the Company’s audited Consolidated Financial Statements and notes included in the company’s Annual Report on Form 10-K for the year ended December 31, 2023.
The Company has prepared the accompanying Condensed Consolidated Financial Statements on the same basis as the audited financial statements, and the unaudited interim financial statements include, in the Company’s opinion, all adjustments, consisting only of normal recurring adjustments that the Company considers necessary for a fair presentation of its financial position and results of operations for these periods.
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, liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates and assumptions, including those related to research and development accruals, recoverability of long-lived assets, right-of-use assets, lease obligations, stock-based compensation and income taxes uncertainties and valuation allowances. Management bases its estimates on historical experience and on various other assumptions that are 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 that are not readily apparent from other sources. Actual results may differ from those estimates.
3. FAIR VALUE MEASUREMENTS
The following tables present the Company’s fair value hierarchy for assets measured at fair value on a recurring basis:
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As of September 30, 2024 |
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Level 1 |
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Level 2 |
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Level 3 |
|
|
Total |
|
||||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
As of December 31, 2023 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
10
4. BALANCE SHEET COMPONENTS
Prepaid expenses and other current assets consist of the following:
|
|
September 30, |
|
|
December 31, |
|
||
Prepaid expenses |
|
$ |
|
|
$ |
|
||
Prepaid research and development costs |
|
|
|
|
|
|
||
Other current assets |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
Property and equipment, net, consists of the following:
|
|
September 30, |
|
|
December 31, |
|
||
Computer equipment and software |
|
$ |
|
|
$ |
|
||
Furniture and fixtures |
|
|
|
|
|
|
||
Lab equipment |
|
|
|
|
|
|
||
Leasehold improvements |
|
|
|
|
|
|
||
Property and equipment |
|
|
|
|
|
|
||
Less accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
Property and equipment—net |
|
$ |
|
|
$ |
|
||
Depreciation expense for the three and nine months ended September 30, 2024 was $
Accrued liabilities consist of the following:
|
|
September 30, |
|
|
December 31, |
|
||
Accrued other liabilities |
|
$ |
|
|
$ |
|
||
Accrued clinical trial liability |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
5. COMMITMENTS AND CONTINGENCIES
Facilities Lease Agreements
In January 2022, the Company entered into a new
As of September 30, 2024 and December 31, 2023, the balance of the operating lease right of use assets were $
Rent expense was $
11
As of September 30, 2024, future minimum lease payments under the Company's operating lease liabilities were as follows:
|
|
|
|
|
Year Ending |
|
Total Commitment |
|
|
2024 (excluding nine months ended September 30, 2024) |
|
$ |
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 and beyond |
|
|
|
|
Total minimum lease payments |
|
|
|
|
Less: imputed interest |
|
|
( |
) |
Present value of operating lease obligations |
|
|
|
|
Less: current portion |
|
|
( |
) |
Noncurrent operating lease obligations |
|
$ |
|
|
Related to this Brisbane Lease agreement, the Company entered into a letter of credit with a bank to deposit $
6. LOAN PAYABLE
On January 15, 2021, the Company entered into a loan agreement with Oxford Finance LLC (the “Lender”) to borrow a term loan amount of up to $
On December 23, 2022, in connection with and following the Company’s merger with Millendo Therapeutics, Inc. (“Millendo”), the Company entered into a First Amendment to the loan agreement. The amendment modified the agreement as follows: (i) each of the Company and Millendo Therapeutics US, Inc., a Delaware corporation and wholly owned non-operating subsidiary of the Company created in connection with the merger (“Millendo US”), were joined as co-borrowers under the Loan Agreement; (ii)
Following the amendment to the loan agreement, the term loan matures on
For the three and nine months ended September 30, 2024, total interest expense was $
12
7. STOCKHOLDERS' EQUITY
Common Stock
As of September 30, 2024 and December 31, 2023, the Company was authorized to issue
Common stockholders are entitled to dividends as declared by the Board of Directors, subject to rights of holders of all classes of stock outstanding having priority rights as to dividends. There have been no dividends declared to date. The holders of each share of common stock are entitled to one vote. Except for effecting or validating certain specific actions intended to protect the preferred stockholders, the holders of common stock vote together with preferred stockholders and have the right to elect one member of the Board of Directors.
Rights Plan
On October 10, 2023, the Board of Directors adopted a limited duration stockholder rights plan (the “Rights Plan”), effective immediately, and declared a dividend of one preferred share purchase right (each, a “Right” and collectively, the “Rights”) for each outstanding share of the common stock, par value $
8. STOCK-BASED COMPENSATION
Equity Plans
The Board of Directors adopted the Amended and Restated 2023 Equity Incentive Plan (the “2023 Plan”) on April 30, 2023, subject to approval by the Company’s stockholders. On June 15, 2023, the Company’s stockholders approved the 2023 Plan, which amended and restated the A&R 2019 Plan and will be a successor to, and replacement of, the A&R 2019 Plan. The number of shares of the Company's common stock reserved for issuance under the 2023 Plan will automatically increase on January 1st of each year, for a period of
13
The 2023 Plan allows the Company to grant stock awards to employees, directors and consultants of the Company, including incentive stock options (“ISOs”), non-qualified stock options (“NSOs”), stock appreciation rights, restricted stock awards, restricted stock unit awards and other stock awards.
The Board of Directors adopted the 2023 Inducement Plan (“2023 Inducement Plan”) on June 21, 2023, pursuant to which the Company reserved
The Company measures employee and non-employee stock-based awards at grant date fair value and records compensation expense on a straight-line basis over the vesting period of the award.
Employee Stock Ownership Plan
The Millendo board of directors adopted the 2019 Employee Stock Purchase Plan on April 29, 2019, which became effective upon stockholder approval on June 11, 2019. On June 17, 2022, the Company’s stockholders approved the Amended and Restated 2019 Employee Stock Purchase Plan (the “2019 ESPP”). The 2019 ESPP enables employees to purchase shares of the Company's common stock through offerings of rights to purchase the Company's common stock to all eligible employees.
The 2019 ESPP provides that the number of shares of common stock reserved for issuance under the 2019 ESPP will automatically increase on January 1, 2023 and continuing through (and including) January 1, 2029, by the lesser of
As of September 30, 2024,
Stock Options
Options to purchase the Company’s common stock may be granted at a price not less than the fair market value in the case of both NSOs and ISOs, except for an options holder who owns more than 10% of the voting power of all classes of stock of the Company, in which case the exercise price shall be no less than
14
The following shows the stock option activities for the nine months ended September 30, 2024 and 2023:
|
|
Total |
|
|
Weighted-Average |
|
||
Balance—December 31, 2023 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Exercised |
|
|
( |
) |
|
|
|
|
Cancelled and forfeited |
|
|
( |
) |
|
|
|
|
Balance—September 30, 2024 |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Balance—December 31, 2022 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Exercised |
|
|
( |
) |
|
|
|
|
Cancelled and forfeited |
|
|
( |
) |
|
|
|
|
Balance—September 30, 2023 |
|
|
|
|
|
|
||
The following table summarizes information about stock options outstanding at September 30, 2024:
|
|
Shares |
|
|
Weighted |
|
|
Weighted |
|
|
Aggregate |
|
||||
Options outstanding |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||||
Vested and expected to vest |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||||
Exercisable |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||||
During the nine months ended September 30, 2024 and 2023, the Company granted employees and non-employees stock options to purchase
The Company estimated the fair value of stock options using the Black-Scholes option pricing valuation model. The fair value of employee and non-employee stock options is being amortized on the straight-line basis over the requisite service period of the awards.
|
|
2024 |
|
|
2023 |
|
||
Expected term (in years) |
|
|
|
|
||||
Expected volatility |
|
|
|
|
||||
Risk-free interest rate |
|
|
|
|
||||
Dividends |
|
|
% |
|
|
% |
||
Expected Term—The expected term of options granted represents the period of time that the options are expected to be outstanding. Due to the lack of historical exercise history, the expected term of the Company’s employee stock options has been determined utilizing the simplified method for awards that qualify as plain-vanilla options.
Expected Volatility—The expected stock price volatility assumption was determined by examining the historical volatilities for industry peers, as the Company did not have any trading history for the Company’s common stock. The Company will continue to analyze the historical stock price volatility and expected term assumption as more historical data for the Company’s common stock becomes available.
15
Risk-Free Interest Rate—The risk-free interest rate assumption is based on the U.S. Treasury instruments whose term was consistent with the expected term of the Company’s stock options.
Dividends—The Company has not paid any cash dividends on common stock since inception and does not anticipate paying any dividends in the foreseeable future. Consequently, an expected dividend yield of zero was used.
Stock-Based Compensation Expense
The following table summarizes the components of stock-based compensation expense recognized in the Company’s condensed consolidated statement of operations for the three and nine months ended September 30, 2024:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Research and development |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
9. RETIREMENT PLAN
The Company participates in a qualified 401(k) Plan sponsored by its professional service organization. The retirement plan is a defined contribution plan covering eligible employees. Participants may contribute a portion of their annual compensation limited to a maximum annual amount set by the Internal Revenue Service. During the three and nine months ended September 30, 2024, the Company contributed $
10. NET LOSS PER SHARE
The following table sets forth the computation of the Company’s basis in diluted net loss per share for the three and nine months ended September 30, 2024 and 2023 (in thousands, except share and per share amounts):
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average shares used in computing basic and diluted net loss per share |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss per share attributable to common stockholders—basic and diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
As of September 30, 2024 and 2023, the Company’s potentially dilutive securities included unvested stock warrants and stock options, which have been excluded from the computation of diluted net loss per share attributable to common stockholders as the effect would be anti-dilutive. The issuance of pre-funded warrants and vested RSUs have been included in the computation of basic and diluted net loss per share attributable to common stockholders.
16
September 30, 2024 and 2023, the Company excluded the following potential common shares from the computation of diluted net loss per share attributable to common stockholders because including them would have had an anti-dilutive effect:
|
|
As of September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Options to purchase common stock |
|
|
|
|
|
|
||
Restricted stock units |
|
|
— |
|
|
|
|
|
Common stock warrants |
|
|
|
|
|
|
||
Total |
|
|
|
|
|
|
||
17
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion of our financial condition and results of operations in conjunction with our unaudited condensed financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q, and our audited consolidated financial statements and related notes for the year ended December 31, 2023, filed with the U.S. Securities and Exchange Commission ("SEC") on March 19, 2024. This discussion and other parts of this report contains forward-looking statements that involve risks and uncertainties, such as our plans, objectives, expectations, intentions, and beliefs, as well as assumptions made by, and information currently available to, our management. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section of this report entitled “Risk Factors,” under Part II, Item 1A of this report and those discussed in our other disclosures and filings with the SEC.
Overview
We are a clinical-stage biotechnology company moving towards late-stage development with a diverse portfolio of targeted and immune-mediated product candidates with the potential to be first-in-class to treat a wide range of cancers. Our novel programs range from early research to the lead program, amezalpat (previously known as TPST-1120), that is poised to begin a pivotal study in first-line hepatocellular carcinoma (“HCC”). In addition to amezalpat, our second clinical-stage therapeutic product candidate is TPST-1495; we believe both are the first clinical-stage molecules designed to inhibit their respective targets.
Our philosophy is to build a company based upon not only good ideas and creative science, but also upon the efficient translation of those ideas into therapies that will improve patients’ lives. Each of our programs are designed to provide different and independent approaches to fighting cancer, providing a portfolio of truly diversified assets.
Amezalpat (TPST-1120) Clinical Update
Amezalpat is a selective antagonist of peroxisome proliferator-activated receptor alpha (“PPARα”). On August 15, 2024, we announced the successful completion of our end-of-Phase 2 meeting with the U.S. Food and Drug Administration (“FDA”) regarding the development of amezalpat for the treatment first-line unresectable or metastatic HCC. The FDA provided positive feedback on the pivotal Phase 3 clinical trial design, which closely mirrors the positive randomized Phase 2 study.
The planned Phase 3 trial is designed to use the current amezalpat dose and schedule in combination with atezolizumab and bevacizumab and will be compared to atezolizumab and bevacizumab alone, the standard of care. The primary endpoint of the trial will be Overall Survival (“OS”). The FDA also agreed on a pre-specified early efficacy analysis, that if met would potentially reduce the time to primary read-out by up to 8 months.
Randomized Phase 2 Trial Results
As of an updated February 14, 2024 data cut, the ongoing global randomized Phase 1b/2 trial of amezalpat combined with the standard-of-care first-line regimen of atezolizumab and bevacizumab continued to show positive outcomes in patients with advanced or metastatic HCC. This study compares the amezalpat arm to the standard-of-care control and enrolled 40 patients randomized to the amezalpat arm and 30 patients randomized to the control arm. With 10 additional months of follow-up since the April 2023 primary analysis, the median OS in the amezalpat arm reached 21 months, representing a 6-month improvement over the 15-month OS in the control arm. Importantly, the hazard ratio (“HR”) remained stable at 0.65 from 0.59 observed earlier, demonstrating a sustained reduction in the relative risk of death compared to the control arm.
At the cutoff date, 50% (20/40) of patients in the amezalpat arm remained in survival follow-up versus 30% (9/30) in the control arm. We believe this reinforces the meaningful clinical benefit observed in this population, with OS serving as the primary endpoint for regulatory approval globally for first-line HCC.
The confirmed objective response rate (“ORR”) for the amezalpat arm remained consistent at 30%, compared to 13.3% in the control arm. Notably, one patient in the amezalpat arm who had previously achieved a partial response (“PR”) as of April 2023
18
converted to a complete response (“CR”) by February 2024, with at least an 80% reduction in tumor burden. This patient, despite having a PD-L1 score <1% and an immune desert phenotype, achieved a CR with the addition of amezalpat, highlighting its potential efficacy in hard-to-treat tumors.
Additionally, in biomarker subpopulation analyses, patients with b-catenin activating mutations (21% of the study population) showed an increased confirmed ORR of 43% and a disease control rate (“DCR”) of 100% in the amezalpat arm. The triplet regimen with amezalpat remained active across PD-L1 negative tumors, with a confirmed ORR of 27% compared to a reduced ORR of 7% for the control arm.
These randomized data, combined with clinical data from the earlier Phase 1 trials that were reported at a podium presentation at the American Society of Clinical Oncology (“ASCO”) annual meeting in June 2022, we believe support the advancement of amezalpat to a pivotal Phase 3 trial in first-line HCC, with further potential indications in kidney cancer (“RCC”) under consideration.
Leadership Team Expansion and Update
In preparation for the pivotal Phase 3 of amezalpat, we continued to strengthen our leadership team. In September 2024, we announced the appointment of Sheldon Mullins as Vice President of Regulatory Affairs, following the addition of Troy Wagner as Vice President of Quality Assurance. In addition, Darrin Bomba and Henry Johnson are now serving as Vice President, Development Operations and Vice President, CMC & Medicinal Chemistry, respectively, reflecting their roles in supporting the company’s late-stage clinical development.
TPST-1495
Our second clinical program, TPST-1495, is a dual antagonist of the EP2 and EP4 receptors of prostaglandin E2. Data from the TPST-1495 Phase 1 trial was presented at the ASCO annual meeting in June 2023, and we are planning to advance TPST-1495 in a new indication, Familial Adenomatous Polyposis (“FAP”), for which there are no approved systemic therapies. Given that prostaglandin signaling is implicated in FAP and based on positive preclinical data in a relevant mouse model, we believe there is strong mechanistic support for this approach. We are working with the Cancer Prevention Clinical Trials Network on a National Cancer Institute (“NCI”)-funded Phase 2 study and subject to final approval, plan to start the study in the second half of 2024.
Beyond these clinical programs, we plan to continue to leverage our drug development and company-building experience along with academic relationships to identify promising new targets that may feed new programs into our pipeline. Our Discovery Research team employs a multidisciplinary approach to identify and validate therapeutic targets in oncology, and preclinical validation studies are then conducted to further understand the mechanism of action and potential therapeutic benefit to patients.
Potential Future Milestones
Recent Events
19
Roche Master Clinical Supply Agreement
In October 2024, we entered into a master clinical supply agreement (“Roche Supply Agreement”) with F. Hoffmann-La Roche Ltd. (“Roche”), pursuant to which Roche will supply Roche’s atezolizumab (TECENTRIQ) for use in one or more clinical studies conducted by us involving amezalpat in combination with atezolizumab, in each case, in accordance with the applicable study protocol prepared by us and reviewed by Roche. Under the Roche Supply Agreement, the parties may execute one or more clinical supply agreement supplements (each, a “CSA Supplement”) that will set forth the study to be conducted by us, the quantities of atezolizumab to be supplied by Roche for such study, and the delivery timeline for such quantities of atezolizumab.
In October 2024, we entered into a CSA Supplement for Roche to supply atezolizumab to us, free of charge, for use in our planned phase 3 trial.
Stockholder Rights Plan
We amended our stockholder rights plan on October 9, 2024 to extend the final expiration date until immediately following our 2025 Annual Meeting of Stockholders or, if our stockholders approve the rights plan at or prior to such meeting, to October 10, 2026, unless the rights are earlier redeemed or exchanged by the Company. We do not have any obligation under the rights plan to seek stockholder approval. The rights plan otherwise remains unmodified and in full force and effect in accordance with its original terms. The rights plan is intended to reduce the likelihood that any person or group gains control of Tempest through open market accumulation without paying stockholders an appropriate control premium or without providing the Board sufficient time to make informed judgments and take actions that are in the best interests of all stockholders.
Going Concern
We have no products approved for commercial sale and have not generated any revenue from product sales. From inception through September 30, 2024, we have raised $211.3 million, through sales of our capital securities.
We have never been profitable and have incurred operating losses in each period since inception. Our net losses were $28.0 million and $22.0 million for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, we had an accumulated deficit of $193.3 million. Substantially all of the operating losses resulted from expenses incurred in connection with our research and development programs and from general and administrative costs associated with our operations.