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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

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: 001-39509

 

 

Dyne Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

36-4883909

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

830 Winter Street

Waltham, Massachusetts

02451

(Address of principal executive offices)

(Zip Code)

(781) 786-8230

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

 

DYN

 

Nasdaq Global Select Market

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.     Yes      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).     Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-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      No  

As of July 31, 2021, the registrant had 51,278,464 shares of common stock, $0.0001 par value per share, outstanding.

 

 

 

 


 

 

Table of Contents

 

 

 

Page

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

2

PART I.

FINANCIAL INFORMATION

4

Item 1.

Financial Statements (Unaudited)

4

 

Condensed Consolidated Balance Sheets

4

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

5

 

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

6

 

Condensed Consolidated Statements of Cash Flows

7

 

Notes to Unaudited Condensed Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

27

Item 4.

Controls and Procedures

27

PART II.

OTHER INFORMATION

28

Item 1A.

Risk Factors

28

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

81

Item 3.

Defaults Upon Senior Securities

81

Item 4.

Mine Safety Disclosures

81

Item 5.

Other Information

81

Item 6.

Exhibits

82

Signatures

83

 

 

We own or have rights to trademarks, service marks and trade names that we use in connection with the operation of our business, including our corporate name, logos and website names. The service marks and trademarks that we own include the marks Dyne Therapeutics™ and FORCE™. Other trademarks, service marks and trade names appearing in this Quarterly Report on Form 10-Q are the property of their respective owners. Solely for convenience, some of the trademarks, service marks and trade names referred to in this Quarterly Report on Form 10-Q are listed without the ® and ™ symbols, but we will assert, to the fullest extent under applicable law, our rights to our trademarks, service marks and trade names.

1


 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q, or this Quarterly Report, contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act and Section 21E of the Securities Exchange Act of 1934, as amended, that involve substantial risk and uncertainties. All statements other than statements of historical fact, contained in this Quarterly Report, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate,” “believe,” “continue” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “would,” or the negative of these words or other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

 

The forward-looking statements in this Quarterly Report include, among other things, statements about:

 

 

the initiation, timing, progress and results of our research and development programs and preclinical studies and clinical trials;

 

the anticipated timing of the submission of investigational new drug applications, or INDs, for any product candidates we develop;

 

the impact of the ongoing COVID-19 pandemic and our response to it;

 

our estimates regarding expenses, future revenue, capital requirements, need for additional financing and the period over which we believe our cash, cash equivalents and marketable securities, will be sufficient to fund our operating expenses and capital expenditure requirements;

 

our plans to develop and, if approved, subsequently commercialize any product candidates we may develop;

 

the timing of and our ability to submit applications for, obtain and maintain regulatory approvals for any product candidates we may develop;

 

the potential advantages of our FORCE platform;

 

our commercialization, marketing and manufacturing capabilities and strategy;

 

our intellectual property position and our expectations regarding our ability to obtain and maintain intellectual property protection;

 

our ability to identify additional products, product candidates or technologies with significant commercial potential that are consistent with our commercial objectives;

 

the impact of government laws and regulations;

 

our competitive position and expectations regarding developments and projections relating to our competitors and any competing therapies that are or become available;

 

developments and expectations regarding developments and projections relating to our competitors and our industry;

 

our ability to establish and maintain collaborations or obtain additional funding; and

 

our expectations regarding the time during which we will be an emerging growth company under the JOBS Act.

 

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report, particularly in Item 1A. “Risk Factors” in this Quarterly Report, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Moreover, we operate in a competitive and rapidly changing environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties, 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 materially from those contained in any forward-looking statements we may make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, collaborations, joint ventures or investments we may make or enter into.

 

You should read this Quarterly Report and the documents that we have filed or incorporated by reference as exhibits to this Quarterly Report with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements contained in this Quarterly Report are made as of the date of this Quarterly Report, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

2


 

RISK FACTOR SUMMARY

 

Our business is subject to a number of risks that, if realized, could materially affect our business, prospects, operating results and financial condition. These risks are discussed more fully in the “Risk Factors” section of this Quarterly Report. These risks include, but are not limited to, the following:

 

 

our limited operating history may make it difficult to evaluate the success of our business to date and to assess our future viability;

 

 

we are very early in our development efforts. Our product candidates are in varying stages of preclinical development, and we have not advanced any product candidate into clinical development. As a result it will be many years before we commercialize a product candidate, if ever. If we are unable to advance product candidates through preclinical studies and clinical trials, obtain marketing approval and ultimately commercialize them, or experience significant delays in doing so, our business will be materially harmed;

 

 

we may encounter substantial delays in commencement, enrollment or completion of our clinical trials or we may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities, which could prevent us from commercializing any product candidates we determine to develop on a timely basis, if at all;

 

 

our approach to the discovery and development of product candidates based on our FORCE platform is unproven, and we may not be successful in our efforts to develop our product candidates;

 

 

the outcome of preclinical studies and earlier-stage clinical trials may not be predictive of future results or the success of later preclinical studies and clinical trials;

 

 

if our product candidates cause undesirable side effects or have other unexpected adverse properties, such side effects or properties could delay or prevent regulatory approval, limit the commercial potential or result in significant negative consequences following any potential marketing approval;

 

 

we rely, and expect to continue to rely, on third parties to conduct some or all aspects of our product manufacturing, research, preclinical and clinical testing, and these third parties may not perform satisfactorily;

 

 

we face substantial competition, which may result in others discovering, developing or commercializing products before us or more successfully than we do;

 

 

our rights to develop and commercialize any product candidates are subject and may in the future be subject, in part, to the terms and conditions of licenses granted to us by third parties. If we fail to comply with our obligations under current or future intellectual property license agreements or otherwise experience disruptions to our business relationships with our current or any future licensors, we could lose intellectual property rights that are important to our business;

 

 

if we or our licensors are unable to obtain, maintain and defend patent and other intellectual property protection for any product candidates or technology, or if the scope of the patent or other intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize products and technology similar or identical to ours, and our ability to successfully develop and commercialize our product candidates or our technology may be adversely affected due to such competition; and

 

 

the COVID-19 pandemic may affect our ability to initiate and complete preclinical studies, delay the initiation of our planned clinical trial or future clinical trials, disrupt regulatory activities, or have other adverse effects on our business and operations. In addition, this pandemic has caused substantial disruption in the financial markets and may adversely impact economies worldwide, which could negatively impact our operations.

 

3


 

 

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

Dyne Therapeutics, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except share and per share data)

 

 

 

June 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

258,385

 

 

$

300,852

 

Marketable securities

 

 

177,204

 

 

 

44,462

 

Prepaid expenses and other current assets

 

 

25,708

 

 

 

3,773

 

Total current assets

 

 

461,297

 

 

 

349,087

 

Property and equipment, net

 

 

2,589

 

 

 

1,946

 

Right-of-use asset

 

 

376

 

 

 

 

Restricted cash and other assets

 

 

2,885

 

 

 

2,301

 

Total assets

 

$

467,147

 

 

$

353,334

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

 

5,649

 

 

 

3,440

 

Accrued expenses and other current liabilities

 

 

8,499

 

 

 

7,527

 

Lease liability

 

 

403

 

 

 

 

Total liabilities

 

 

14,551

 

 

 

10,967

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 10,000,000 shares

   authorized at June 30, 2021 and December 31, 2020

 

 

 

 

 

 

Common stock, $0.0001 par value; 200,000,000 shares

   authorized at June 30, 2021 and December 31, 2020;

   51,441,908 and 45,446,903 shares issued and

   51,232,341 and 45,076,574 shares outstanding at

   June 30, 2021 and December 31, 2020, respectively

 

 

6

 

 

 

5

 

Additional paid-in capital

 

 

586,737

 

 

 

421,572

 

Accumulated other comprehensive loss

 

 

(41

)

 

 

(27

)

Accumulated deficit

 

 

(134,106

)

 

 

(79,183

)

Total stockholders’ equity

 

 

452,596

 

 

 

342,367

 

Total liabilities and stockholders’ equity

 

$

467,147

 

 

$

353,334

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

4


 

 

Dyne Therapeutics, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

(in thousands, except share and per share data)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

23,872

 

 

$

7,334

 

 

$

42,496

 

 

$

13,423

 

General and administrative

 

 

6,293

 

 

 

1,341

 

 

 

12,802

 

 

 

3,105

 

Total operating expenses

 

 

30,165

 

 

 

8,675

 

 

 

55,298

 

 

 

16,528

 

Loss from operations

 

 

(30,165

)

 

 

(8,675

)

 

 

(55,298

)

 

 

(16,528

)

Other (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

210

 

 

 

 

 

 

375

 

 

 

24

 

Interest expense

 

 

 

 

 

(127

)

 

 

 

 

 

(184

)

Change in success fee obligation

 

 

 

 

 

(180

)

 

 

 

 

 

(180

)

Total other (expense) income, net

 

 

210

 

 

 

(307

)

 

 

375

 

 

 

(340

)

Net loss

 

$

(29,955

)

 

$

(8,982

)

 

$

(54,923

)

 

$

(16,868

)

Net loss per share—basic and diluted

 

$

(0.58

)

 

$

(3.31

)

 

$

(1.09

)

 

$

(6.31

)

Weighted-average common shares outstanding used in net

   loss per share—basic and diluted

 

 

51,216,254

 

 

 

2,710,556

 

 

 

50,349,193

 

 

 

2,675,260

 

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(29,955

)

 

$

(8,982

)

 

$

(54,923

)

 

$

(16,868

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains (losses) on marketable securities, net

 

 

27

 

 

 

 

 

 

(14

)

 

 

 

Comprehensive loss

 

$

(29,928

)

 

$

(8,982

)

 

$

(54,937

)

 

$

(16,868

)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

5


 

 

Dyne Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (Unaudited)

(in thousands, except share data and issuance costs)

 

 

 

Convertible Preferred

Stock

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

Other

 

 

Accumulated

 

 

Stockholders’

Equity

 

(in thousands, except per share data)

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Comprehensive Loss

 

 

Deficit

 

 

(Deficit)

 

Balance at January 1, 2021

 

 

 

 

$

 

 

 

45,076,574

 

 

$

5

 

 

$

421,572

 

 

$

(27

)

 

$

(79,183

)

 

$

342,367

 

Issuance of common stock upon follow-on public

   offering, net of issuance costs of $0.7 million

 

 

 

 

 

 

 

 

6,000,000

 

 

 

1

 

 

 

157,236

 

 

 

 

 

 

 

 

 

157,237

 

Exercise of stock options

 

 

 

 

 

 

 

 

11,163

 

 

 

 

 

 

13

 

 

 

 

 

 

 

 

 

13

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,652

 

 

 

 

 

 

 

 

 

3,652

 

Vesting of restricted shares

 

 

 

 

 

 

 

 

70,539

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized losses on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(41

)

 

 

 

 

 

(41

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(24,968

)

 

 

(24,968

)

Balance at March 31, 2021

 

 

 

 

$

 

 

 

51,158,276

 

 

$

6

 

 

$

582,473

 

 

$

(68

)

 

$

(104,151

)

 

$

478,260

 

Exercise of stock options

 

 

 

 

 

 

 

 

10,088

 

 

 

 

 

 

25

 

 

 

 

 

 

 

 

 

25

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,239

 

 

 

 

 

 

 

 

 

4,239

 

Vesting of restricted shares

 

 

 

 

 

 

 

 

63,977

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized losses on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27

 

 

 

 

 

 

27

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(29,955

)

 

 

(29,955

)

Balance at June 30, 2021

 

 

 

 

$

 

 

 

51,232,341

 

 

$

6

 

 

$

586,737

 

 

$

(41

)

 

$

(134,106

)

 

$

452,596

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible Preferred

Stock

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

Other

 

 

Accumulated

 

 

Stockholders’

Equity

 

(in thousands, except per share data)

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Comprehensive Loss

 

 

Deficit

 

 

(Deficit)

 

Balance at January 1, 2020

 

 

32,500,000

 

 

$

27,429

 

 

 

2,586,535

 

 

$

1

 

 

$

6,352

 

 

$

 

 

$

(19,746

)

 

$

14,036

 

Issuance of Series A convertible preferred stock, net

   of issuance costs of $0.1 million

 

 

2,000,000

 

 

 

1,972

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,972

 

Vesting of restricted shares

 

 

 

 

 

 

 

 

70,538

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

66

 

 

 

 

 

 

 

 

 

66

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,886

)

 

 

(7,886

)

Balance at March 31, 2020

 

 

34,500,000

 

 

$

29,401

 

 

 

2,657,073

 

 

$

1

 

 

$

6,418

 

 

$

 

 

$

(27,632

)

 

$

8,188

 

Exercise of stock options

 

 

 

 

 

 

 

 

753

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

75

 

 

 

 

 

 

 

 

 

75

 

Vesting of restricted shares

 

 

 

 

 

 

 

 

70,539

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,982

)

 

 

(8,982

)

Balance at June 30, 2020

 

 

34,500,000

 

 

$

29,401

 

 

 

2,728,365

 

 

$

1

 

 

$

6,493

 

 

$

 

 

$

(36,614

)

 

$

(719

)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 


6


 

 

 

Dyne Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

 

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(54,923

)

 

$

(16,868

)

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

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

7,891

 

 

 

141

 

Depreciation and amortization expense

 

 

487

 

 

 

308

 

Amortization of debt discount

 

 

 

 

 

13

 

Non-cash lease expense

 

 

(15

)

 

 

 

Amortization (accretion) of premium (discount) on marketable securities

 

 

1,146

 

 

 

 

Changes in success fee obligation

 

 

 

 

 

180

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(21,393

)

 

 

(82

)

Other assets

 

 

(578

)

 

 

 

Accounts payable and other liabilities

 

 

2,842

 

 

 

1,722

 

Net cash used in operating activities

 

 

(64,543

)

 

 

(14,586

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(747

)

 

 

(282

)

Purchases of marketable securities

 

 

(156,562

)

 

 

 

Maturities of marketable securities

 

 

22,500

 

 

 

 

Net cash used in investing activities

 

 

(134,809

)

 

 

(282

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from follow-on public offering of common stock, net of issuance costs

 

 

157,237

 

 

 

 

Proceeds from issuance of debt, net of issuance costs

 

 

 

 

 

9,936

 

Proceeds from issuance of convertible preferred stock, net of issuance costs

 

 

 

 

 

1,972

 

Proceeds from exercise of stock options

 

 

38

 

 

 

 

Net cash provided by financing activities

 

 

157,275

 

 

 

11,908

 

Net increase in cash and cash equivalents

 

 

(42,077

)

 

 

(2,960

)

Cash, cash equivalents and restricted cash, beginning of period

 

 

303,153

 

 

 

14,632

 

Cash, cash equivalents and restricted cash, end of period

 

$

261,076

 

 

$

11,672

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

Cash paid for interest and taxes

 

$

 

 

$

183

 

Supplemental disclosure of non-cash investing and financing information:

 

 

 

 

 

 

 

 

Purchase of property and equipment in accounts payable

 

$

383

 

 

$

39

 

Issuance costs from convertible preferred stock included in accounts payable or accrued expenses

 

$

 

 

$

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

7


 

 

Dyne Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

1. Nature of the Business and Basis of Presentation

Dyne Therapeutics, Inc. (the “Company”) is building a leading muscle disease company focused on advancing innovative life-transforming therapeutics for people living with genetically driven diseases that was incorporated in Delaware on December 1, 2017 and has a principal place of business in Waltham, Massachusetts.

 

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, risks of failure of preclinical studies and clinical trials, the need to obtain marketing approval for its product candidates, fluctuations in operating results, compliance with government regulations, the ability to establish clinical- and commercial-scale manufacturing processes, the impact of the COVID-19 pandemic and the ability to secure additional capital to fund operations. Programs currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization of a product. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

 

On September 21, 2020, the Company completed its initial public offering (“IPO”) pursuant to which it issued and sold 14,089,314 shares of its common stock, including 1,837,736 shares pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $19.00 per share, resulting in net proceeds of $246.4 million, after deducting underwriting discounts and commissions and offering expenses. Upon the closing of the IPO, all of the Company’s then outstanding convertible preferred stock automatically converted into shares of common stock.

 

On January 25, 2021, the Company completed a follow-on public offering of common stock pursuant to which it issued and sold 6,000,000 shares of its common stock at a public offering price of $28.00 per share, resulting in net proceeds of $157.2 million, after deducting underwriting discounts and commissions and offering expenses.

 

The accompanying condensed consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business. Since inception, the Company has funded its operations with proceeds from the sales of preferred stock and common stock, including the IPO completed in September 2020 and the follow-on offering completed in January 2021. The Company expects to continue to generate operating losses for the foreseeable future. The Company expects that its cash, cash equivalents and marketable securities will be sufficient to fund its operating expenses and capital expenditure requirements for at least 12 months from the issuance of these condensed consolidated financial statements.

 

To continue its development efforts, the Company will need to obtain substantial additional funding through public or private equity offerings, debt financings, collaborations, strategic alliances and/or licensing arrangements in order to fund its research and development and ongoing operating expenses. The Company may not be able to obtain financing on acceptable terms, when needed or at all, and the Company may not be able to enter into collaborations, strategic alliances or licensing arrangements. The terms of any financing may adversely affect the holdings or the rights of the Company’s stockholders. Any collaborations, strategic alliances or licensing arrangements may require the Company to relinquish rights to certain of its technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to the Company. If the Company is unable to obtain funding, the Company could be forced to delay, limit, reduce or eliminate some or all of its research and development programs, pipeline expansion or future commercialization efforts or grant rights to develop and market product candidates, which could adversely affect its business prospects. Although management will continue to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company to fund continuing operations when needed or at all.

 

 

To date, the Company has not experienced material business disruptions, including with its vendors, as a result of the COVID-19 pandemic. In March 2020, the Company implemented a remote working policy for many of its employees and began restricting non-essential travel, and in May 2020, when Massachusetts began its staged reopening plan, the Company began implementing a return-to-work plan, in accordance with the guidance and requirements of federal and state authorities. The Company expects to continue to take actions as may be required or recommended by government authorities or as it determines are in the best interests of its employees and other business partners. The Company is continuing to monitor the potential impact of the pandemic, but cannot be certain what the overall impact will be on its business, financial condition, results of operations and prospects.

8


 

2. Summary of Significant Accounting Policies

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles (“GAAP”) in the United States of America. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

The financial statements of the Company included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The unaudited interim financial statements have been prepared on the same basis as audited annual financial statements, except certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations. In the opinion of management, the interim financial information reflects all adjustments, all of which are of a normal and recurring nature, necessary for a fair representation of the results for the reported periods. Accordingly, these financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s annual report on Form 10-K filed with the SEC on March 4, 2021. The results for the six months ended June 30, 2021 are not necessarily indicative of results to be expected for the year ending December 31, 2021, any other interim periods, or any future year or period.

Marketable securities

The Company’s marketable securities as of June 30, 2021 consisted of commercial paper, certificates of deposit, corporate debt securities and US treasury securities and are classified as available-for-sale and are reported at fair value. Unrealized losses on available-for-sale debt securities are reported as a component of accumulated other comprehensive loss in stockholders’ equity. Realized gains and losses are based on the specific identification method and are included as a component of other income (expense), net in the condensed consolidated statements of operations and comprehensive loss.

The Company evaluates its marketable securities with unrealized losses for other-than-temporary impairment. When assessing marketable securities for other-than-temporary declines in value, the Company considers such factors as, among other things, how significant the decline in value is as a percentage of the original cost, how long the market value of the investment has been less than its original cost, the Company’s ability and intent to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value and market conditions in general. If any adjustment to fair value reflects a decline in the value of the investment that the Company considers to be “other than temporary,” the Company reduces the investment to fair value through a charge to the statement of operations and comprehensive loss. No such adjustments were necessary during the periods presented.

Property and equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization expense is recognized using the straight-line method over the estimated useful life of each asset as follows:

 

 

 

Estimated Useful Life

Laboratory equipment

 

5 years

Furniture and fixtures

 

5 years

Computer equipment

 

3 years

Leasehold improvements

 

Shorter of life of lease or 10 years

 

Costs for capital assets not yet placed into service are capitalized as construction-in-progress and depreciated once placed into service. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is included in loss from operations. Expenditures for repairs and maintenance which do not improve or extend the life of the respective assets are charged to expense as incurred.

Leases

Prior to January 1, 2021, the Company accounted for leases under ASC 840, Leases (“ASC 840”). The Company recorded monthly rent expense on a straight-line basis, equal to the total of the payments due over the lease term, divided by the number of months of the lease term. The difference between rent expense recorded and the amount paid was charged to deferred rent.

Effective January 1, 2021, the Company adopted ASU 2016-02, Leases (Topic 842) (“ASC 842”), using the modified retrospective approach transition method as of the date of adoption. Under this method, financial statements for reporting

9


 

periods after adoption are presented in accordance with ASC 842 and prior-period financial statements continue to be presented in accordance with ASC 840. Upon adoption, the Company recognized lease liabilities totaling $0.8 million and right-of-use assets totaling $0.7 million.

Under ASC 842, at the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances presented in the arrangement, including whether the Company controls the use of identified assets. The Company classifies leases with a term greater than one year as either operating or finance leases at the lease commencement date and records a right-of-use assets and current and non-current lease liabilities, as applicable on the balance sheet. The Company has elected not to recognize on the balance sheet leases with terms of one year or less, but payments are recognized as expense on a straight-line basis over the lease term. If a lease includes options to extend the lease term, the Company does not assume the option will be exercised in its initial lease term assessment unless there is reasonable certainty that the Company will renew based on an assessment of economic factors present as of the lease commencement date. The Company monitors its plans to renew its material leases each reporting period.

Lease liabilities and the corresponding right-of-use assets are recorded based on the present value of lease payments over the remaining lease term. The present value of future lease payments are discounted using the interest rate implicit in lease contracts if that rate is readily determinable; otherwise the Company utilizes its incremental borrowing rate (“IBR”), which reflects the fixed rate at which the Company could borrow on a collateralized basis over a similar term, the amount of the lease payments in a similar economic environment. After lease commencement and the establishment of a right-to-use asset and operating lease liability, lease expense is recorded on a straight-line basis over the lease term.

The Company enters into contracts that contain both lease and non-lease components. Non-lease components include costs that do not provide a right-to-use a leased asset but instead provide a service, such as maintenance costs. The Company has elected to account for the lease and non-lease components together as a single component for all classes of underlying assets. Variable costs associated with the lease, such as maintenance and utilities, are not included in the measurement of right-to-use assets and lease liabilities but rather are expensed when the events determining the amount of variable consideration to be paid have occurred.

Segment information

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions on how to allocate resources and assess performance. The Company’s chief operating decision maker is the chief executive officer (“CEO”). The CEO views the Company’s operations and manages the business as one operating segment.

Fair value measurements

Certain assets and liabilities are carried at fair value. Fair value is defined as the amount that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

Level 1—Unadjusted quoted prices in active markets that are accessible to the reporting entity at the measurement date for identical assets and liabilities.

 

 

Level 2—Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following:

 

 

quoted prices for similar assets and liabilities in active markets;