10-Q
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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, 2023

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: 001-40656

 

TENAYA THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

81-3789973

(State or other jurisdiction of

incorporation or organization)

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

171 Oyster Point Boulevard, Suite 500

South San Francisco, CA

94080

(Address of principal executive offices)

(Zip Code)

 

(650) 825-6990

(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, par value $0.0001 per share

 

TNYA

 

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 August 3, 2023, the registrant had 67,865,158 shares of common stock, $0.0001 par value per share, outstanding.

 


 

Table of Contents

 

 

 

 

Page

 

PART I—FINANCIAL INFORMATION

 

 

 

 

 

Item 1.

Financial Statements (Unaudited)

5

 

 

Condensed Balance Sheets as of June 30, 2023 and December 31, 2022

5

 

 

Condensed Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2023 and 2022

6

 

 

Condensed Statements of Stockholders’ Equity for the three and six months ended June 30, 2023 and 2022

7

 

 

Condensed Statements of Cash Flows for the six months ended June 30, 2023 and 2022

9

 

 

Notes to Unaudited Condensed Financial Statements

10

Item 2.

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

18

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

24

Item 4.

Controls and Procedures

24

 

 

PART II—OTHER INFORMATION

 

Item 1.

Legal Proceedings

26

Item 1A.

Risk Factors

26

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

73

Item 3.

Defaults Upon Senior Securities

73

Item 4.

Mine Safety Disclosures

73

Item 5.

Other Information

73

Item 6.

Exhibits

74

SIGNATURES

76

 

 

 


SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, or Quarterly Report, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations and financial position, business strategy, development plans, planned preclinical studies and clinical trials, future results of clinical trials, expected research and development costs, regulatory strategy, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. In some cases, investors can identify forward-looking statements by terms such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. These forward-looking statements include, but are not limited to, statements about:

our vision to change the treatment paradigm for heart disease;
the ability of our ongoing preclinical studies and ongoing or planned clinical trials to demonstrate safety and efficacy of our product candidates, and other positive results;
the timing, dosing, patient enrollment and populations, progress, and results of preclinical studies and ongoing or planned clinical trials for our current product candidates and other product candidates we may develop;
the timing, scope and likelihood of regulatory filings and approvals, including timing of investigational new drugs (INDs), clinical trial applications (CTAs), U.S. Food and Drug Administration (FDA) approvals, and final regulatory approval of our current product candidates and any other future product candidates;
our ability to develop and advance our current product candidates and programs into, and successfully complete, clinical trials;
the size of the market opportunity for our product candidates, including our estimates of the number of patients who suffer from the diseases we are targeting;
our manufacturing, commercialization, and marketing capabilities and strategy;
our competitive position and the success of competing therapies that are or may become available;
our plans relating to the further development of our product candidates, including additional indications and targets we may pursue;
the impact of existing laws and regulations and regulatory developments in the United States (U.S), Europe and other jurisdictions;
our intellectual property position, including the scope and length of protection we are able to establish and maintain for intellectual property rights covering our current product candidates and other product candidates we may develop, including the extensions of existing patent terms where available, the validity of intellectual property rights held by third parties, and our ability not to infringe, misappropriate or otherwise violate any third-party intellectual property rights;
our continued reliance on third parties to conduct additional preclinical studies and clinical trials of our product candidates, and for the development and manufacture of our product candidates for preclinical studies and clinical trials;
our ability to obtain, and negotiate favorable terms of, any collaboration, partnership, licensing or other arrangements that may be necessary or desirable to develop, manufacture or commercialize our product candidates;
the pricing and reimbursement of our current product candidates and other product candidates we may develop, if approved, including any increase in demand as a result of the availability of reimbursement from the government and third-party payors;
the rate and degree of market acceptance and clinical utility of our current product candidates and other product candidates we may develop;
our estimates regarding expenses, operating losses, future revenue, cash outlays, capital requirements and needs for additional financing, including expenses arising as a result of being a public company;
our financial performance;
our facilities;
the period over which we estimate our existing cash, cash equivalents and investments in marketable securities will be sufficient to fund our future operating expenses and capital expenditure requirements;

3


the impact of critical accounting policies on investor’s ability to understand our financial performance; and
our expectations regarding the period during which we will remain an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (JOBS Act).

We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we believe may affect our business, financial condition, results of operations and prospects, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors” and elsewhere in this Quarterly Report. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, investors should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

4


 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

TENAYA THERAPEUTICS, INC.

Condensed Balance Sheets

(In thousands)

(Unaudited)

 

 

 

June 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

75,565

 

 

$

95,272

 

Short-term investments in marketable securities

 

 

56,940

 

 

 

91,255

 

Prepaid expenses and other current assets

 

 

6,401

 

 

 

7,227

 

Total current assets

 

 

138,906

 

 

 

193,754

 

Property and equipment, net

 

 

47,039

 

 

 

51,032

 

Operating lease right-of-use assets

 

 

10,133

 

 

 

11,663

 

Long-term investments in marketable securities

 

 

19,136

 

 

 

17,703

 

Other noncurrent assets

 

 

5,540

 

 

 

4,793

 

Total assets

 

$

220,754

 

 

$

278,945

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

8,484

 

 

$

9,578

 

Accrued and other current liabilities

 

 

8,986

 

 

 

10,664

 

Operating lease liabilities, current

 

 

3,447

 

 

 

4,006

 

Total current liabilities

 

 

20,917

 

 

 

24,248

 

Operating lease liabilities, noncurrent

 

 

9,657

 

 

 

11,093

 

Other noncurrent liabilities

 

 

240

 

 

 

228

 

Total liabilities

 

 

30,814

 

 

 

35,569

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock

 

 

7

 

 

 

7

 

Additional paid-in capital

 

 

534,470

 

 

 

522,945

 

Accumulated other comprehensive loss

 

 

(333

)

 

 

(378

)

Accumulated deficit

 

 

(344,204

)

 

 

(279,198

)

Total stockholders’ equity

 

 

189,940

 

 

 

243,376

 

Total liabilities and stockholders’ equity

 

$

220,754

 

 

$

278,945

 

 

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

5


TENAYA THERAPEUTICS, INC.

Condensed Statements of Operations and Comprehensive Loss

(In thousands, except share and per share data)

(Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

26,477

 

 

$

20,876

 

 

$

52,082

 

 

$

45,031

 

General and administrative

 

 

8,627

 

 

 

7,743

 

 

 

16,745

 

 

 

14,742

 

Total operating expenses

 

 

35,104

 

 

 

28,619

 

 

 

68,827

 

 

 

59,773

 

Loss from operations

 

 

(35,104

)

 

 

(28,619

)

 

 

(68,827

)

 

 

(59,773

)

Other income (expense), net:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

1,837

 

 

 

222

 

 

 

3,810

 

 

 

321

 

Other income (expense), net

 

 

(2

)

 

 

 

 

 

11

 

 

 

(1

)

Total other income (expense), net

 

 

1,835

 

 

 

222

 

 

 

3,821

 

 

 

320

 

Net loss before income tax expense

 

 

(33,269

)

 

 

(28,397

)

 

 

(65,006

)

 

 

(59,453

)

Income tax expense

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

(33,269

)

 

 

(28,397

)

 

 

(65,006

)

 

 

(59,453

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gain (loss) on marketable securities

 

 

(213

)

 

 

(108

)

 

 

45

 

 

 

(598

)

Comprehensive loss

 

$

(33,482

)

 

$

(28,505

)

 

$

(64,961

)

 

$

(60,051

)

Net loss per share, basic and diluted

 

$

(0.45

)

 

$

(0.69

)

 

$

(0.89

)

 

$

(1.44

)

Weighted-average shares used in computing net loss per share, basic and diluted

 

 

73,399,847

 

 

 

41,302,157

 

 

 

73,249,702

 

 

 

41,285,168

 

 

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

6


 

TENAYA THERAPEUTICS, INC.

Condensed Statements of Stockholders’ Equity

(In thousands, except share data)

(Unaudited)

 

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated Other Comprehensive

 

 

Accumulated

 

 

Total Stockholders’

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance as of January 1, 2023

 

 

 

66,857,113

 

 

$

7

 

 

$

522,945

 

 

$

(378

)

 

$

(279,198

)

 

$

243,376

 

Issuance of common stock upon exercise
   of stock options and vesting of restricted
   stock units

 

 

 

8,311

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

1

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

3,514

 

 

 

 

 

 

 

 

 

3,514

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

258

 

 

 

 

 

 

258

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(31,737

)

 

 

(31,737

)

Balance as of March 31, 2023

 

 

 

66,865,424

 

 

$

7

 

 

$

526,460

 

 

$

(120

)

 

$

(310,935

)

 

$

215,412

 

Issuance of common stock in connection with
   at-the-market sales, net of issuance costs of $
120

 

 

 

535,767

 

 

 

 

 

 

3,868

 

 

 

 

 

 

 

 

 

3,868

 

Issuance of common stock upon exercise
  of pre-funded warrants

 

 

 

302,517

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock pursuant to
   employee stock purchase plan

 

 

 

150,575

 

 

 

 

 

 

282

 

 

 

 

 

 

 

 

 

282

 

Issuance of common stock upon exercise
   of stock options

 

 

 

10,875

 

 

 

 

 

 

29

 

 

 

 

 

 

 

 

 

29

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

3,831

 

 

 

 

 

 

 

 

 

3,831

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

(213

)

 

 

 

 

 

(213

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(33,269

)

 

 

(33,269

)

Balance as of June 30, 2023

 

 

 

67,865,158

 

 

$

7

 

 

$

534,470

 

 

$

(333

)

 

$

(344,204

)

 

$

189,940

 

 

7


 

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated Other Comprehensive

 

 

Accumulated

 

 

Total Stockholders’

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance as of January 1, 2022

 

 

 

41,291,374

 

 

$

4

 

 

$

434,196

 

 

$

(141

)

 

$

(155,533

)

 

$

278,526

 

Issuance of common stock upon exercise
   of stock options

 

 

 

7,652

 

 

 

 

 

 

17

 

 

 

 

 

 

 

 

 

17

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

 

6

 

 

 

 

 

 

 

 

 

6

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

2,094

 

 

 

 

 

 

 

 

 

2,094

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

(490

)

 

 

 

 

 

(490

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(31,056

)

 

 

(31,056

)

Balance as of March 31, 2022

 

 

 

41,299,026

 

 

$

4

 

 

$

436,313

 

 

$

(631

)

 

$

(186,589

)

 

$

249,097

 

Issuance of common stock upon exercise
   of stock options

 

 

 

13,186

 

 

 

 

 

 

28

 

 

 

 

 

 

 

 

 

28

 

Issuance of common stock pursuant to
   employee stock purchase plan

 

 

 

51,608

 

 

 

 

 

 

230

 

 

 

 

 

 

 

 

 

230

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

 

 

 

5

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

3,012

 

 

 

 

 

 

 

 

 

3,012

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

(108

)

 

 

 

 

 

(108

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(28,397

)

 

 

(28,397

)

Balance as of June 30, 2022

 

 

 

41,363,820

 

 

$

4

 

 

$

439,588

 

 

$

(739

)

 

$

(214,986

)

 

$

223,867

 

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

8


 

TENAYA THERAPEUTICS, INC.

Condensed Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Six Months Ended June 30,

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

Net loss

 

$

(65,006

)

 

$

(59,453

)

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

 

 

 

 

 

 

Depreciation and amortization

 

 

4,325

 

 

 

2,263

 

(Accretion) amortization of (discount) premium on marketable securities

 

 

(1,056

)

 

 

253

 

Stock-based compensation

 

 

7,345

 

 

 

5,106

 

Non-cash operating lease expense

 

 

1,530

 

 

 

795

 

Other

 

 

105

 

 

 

28

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

733

 

 

 

(438

)

Other noncurrent assets

 

 

(726

)

 

 

(132

)

Accounts payable

 

 

(223

)

 

 

(2,120

)

Accrued and other current liabilities

 

 

(1,542

)

 

 

711

 

Operating lease liabilities

 

 

(1,995

)

 

 

(1,206

)

Other noncurrent liabilities

 

 

 

 

 

7

 

Net cash used in operating activities

 

 

(56,510

)

 

 

(54,186

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(837

)

 

 

(15,771

)

Purchases of marketable securities

 

 

(40,998

)

 

 

(65,135

)

Proceeds from maturities of marketable securities

 

 

74,984

 

 

 

127,550

 

Other

 

 

(3

)

 

 

 

Net cash provided by investing activities

 

 

33,146

 

 

 

46,644

 

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from at-the-market sales, net of issuance costs

 

 

3,868

 

 

 

 

Payment of accrued offering costs

 

 

(501

)

 

 

 

Proceeds from exercise of stock options and employee stock purchase plan

 

 

311

 

 

 

275

 

Net cash provided by financing activities

 

 

3,678

 

 

 

275

 

Net change in cash, cash equivalents and restricted cash

 

 

(19,686

)

 

 

(7,267

)

Cash and cash equivalents and restricted cash at beginning of period

 

 

95,671

 

 

 

38,676

 

Cash and cash equivalents and restricted cash at end of period

 

$

75,985

 

 

$

31,409

 

Components of cash, cash equivalents and restricted cash:

 

 

 

 

 

 

Cash and cash equivalents

 

$

75,565

 

 

$

31,010

 

Restricted cash included in other noncurrent assets

 

 

420

 

 

 

399

 

Cash, cash equivalents and restricted cash

 

$

75,985

 

 

$

31,409

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

Property and equipment included in accounts payable and accrued and other current liabilities

 

$

44

 

 

$

3,060

 

 

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

9


 

TENAYA THERAPEUTICS, INC.

Notes to Unaudited Condensed Financial Statements

1.
Organization and Description of the Business

Description of the Business

Tenaya Therapeutics, Inc. (the Company) was incorporated in the state of Delaware in August 2016 and is headquartered in South San Francisco, California. The Company is a clinical-stage biotechnology company focused on discovering, developing and delivering curative therapies that address the underlying drivers of heart disease. The Company’s lead product candidates include, TN-201, a gene therapy for myosin binding protein C3-associated hypertrophic cardiomyopathy, TN-301, a small molecule for heart failure with preserved ejection fraction, and TN-401, a gene therapy for plakophilin 2-associated arrhythmogenic right ventricular cardiomy