UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______________to ____________
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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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. 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).
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.
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Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
As of August 6, 2021, the registrant had
Table of Contents
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Page |
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PART I. |
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Item 1. |
1 |
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1 |
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Condensed Consolidated Statements of Operations and Comprehensive Loss |
2 |
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3 |
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4 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
5 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
13 |
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Item 3. |
19 |
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Item 4. |
19 |
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PART II. |
21 |
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Item 1. |
21 |
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Item 1A. |
21 |
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Item 2. |
37 |
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Item 3. |
38 |
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Item 4. |
38 |
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Item 5. |
38 |
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Item 6. |
39 |
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40 |
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i
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
89bio, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
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June 30, |
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December 31, |
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2021 |
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2020 |
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(Unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash |
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Short-term available-for-sale securities |
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Prepaid and other current assets |
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Total current assets |
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Property and equipment, net |
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Other 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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Total current liabilities |
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Term loan, non-current, net |
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— |
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Total liabilities |
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Commitments and contingencies (Note 5) |
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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 other comprehensive income (loss) |
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( |
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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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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
89bio, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
(In thousands, except share and per share amounts)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2021 |
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2020 |
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2021 |
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2020 |
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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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Total operating expenses |
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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 (expenses) income, net |
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( |
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( |
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( |
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Net loss before tax |
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( |
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( |
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( |
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( |
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Income tax benefit |
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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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Other comprehensive income (loss): |
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Unrealized gain on available-for-sale securities |
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— |
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— |
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Foreign currency translation adjustments |
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( |
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— |
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— |
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Total other comprehensive income |
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$ |
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$ |
— |
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$ |
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$ |
— |
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Comprehensive loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Net loss per share, basic and diluted |
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$ |
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$ |
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$ |
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$ |
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Weighted-average shares used to compute net loss per share, basic and diluted |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
89bio, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
For the Three and Six Months Ended June 30, 2021 and 2020
(Unaudited)
(In thousands, except share amounts)
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Accumulated |
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Additional |
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Other |
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Total |
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Common Stock |
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Paid-in |
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Comprehensive |
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Accumulated |
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Stockholders’ |
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Shares |
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Amount |
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Capital |
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(Loss) Income |
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Deficit |
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Equity |
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Balance as of December 31, 2020 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Issuance of common stock upon exercise of stock options |
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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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Other comprehensive income |
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— |
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— |
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— |
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— |
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Balance as of March 31, 2021 |
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( |
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( |
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Issuance of common stock upon exercise of stock options |
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— |
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— |
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Issuance of common stock upon ESPP purchase |
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— |
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— |
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Issuance of common stock warrant in connection with term loan facility |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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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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Other comprehensive income |
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— |
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— |
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— |
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— |
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Balance as of June 30, 2021 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Accumulated |
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Additional |
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Other |
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Total |
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Common Stock |
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Paid-in |
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Comprehensive |
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Accumulated |
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Stockholders’ |
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Shares |
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Amount |
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Capital |
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Loss |
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Deficit |
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Equity |
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Balance as of December 31, 2019 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Issuance of common stock upon exercise of stock options |
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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 as of March 31, 2020 |
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( |
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Issuance of common stock upon exercise of stock options |
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— |
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— |
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Issuance of common stock upon ESPP purchase |
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— |
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— |
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Issuance of common stock warrant in connection with term loan facility |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
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( |
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Balance as of June 30, 2020 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
89bio, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
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Six Months Ended |
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June 30, |
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2021 |
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2020 |
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Cash flows from operating activities: |
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Net loss |
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$ |
( |
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$ |
( |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation |
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Stock-based compensation |
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Amortization of premium on available-for-sale securities |
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Amortization of debt issuance costs |
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Changes in operating assets and liabilities: |
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Prepaid and other current assets |
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( |
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Other assets |
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— |
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Accounts payable |
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( |
) |
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Accrued expenses |
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( |
) |
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( |
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Net cash used in operating activities |
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( |
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( |
) |
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Cash flows from investing activities: |
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Purchases of available-for-sale securities |
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( |
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( |
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Proceeds from sales and maturities of available-for-sale securities |
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— |
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Purchases of property and equipment |
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( |
) |
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( |
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Net cash used in investing activities |
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( |
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( |
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Cash flows from financing activities: |
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Proceeds from term loan facility, net of issuance costs |
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— |
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Proceeds from issuance of common stock upon stock option exercises |
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Proceeds from issuance of common stock upon ESPP purchase |
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Payment of debt issuance costs |
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— |
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( |
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Net cash provided by (used in) financing activities |
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( |
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Net decrease in cash and cash equivalents, and restricted cash |
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( |
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( |
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Cash and cash equivalents, and restricted cash at beginning of period |
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Cash and cash equivalents, and restricted cash at end of period |
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$ |
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$ |
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Components of cash and cash equivalents, and restricted cash: |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash |
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Total cash and cash equivalents, and restricted cash |
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$ |
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$ |
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Supplemental cash flow disclosures: |
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Property and equipment purchases included in accounts payable and accrued expenses |
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$ |
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$ |
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Issuance of common stock warrant in connection with term loan facility |
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$ |
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$ |
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Debt issuance costs included in accounts payable |
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$ |
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$ |
— |
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Deferred offering costs included in accrued expenses |
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$ |
— |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
89bio, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
1. Organization and Basis of Presentation
Description of Business
89bio, Inc. (“89bio” or the “Company”) is a clinical-stage biopharmaceutical company focused on the development and commercialization of innovative therapies for the treatment of liver and cardio-metabolic diseases. The Company’s lead product candidate, BIO89-100, a specifically engineered glycoPEGylated analog of fibroblast growth factor 21, is currently being developed for the treatment of nonalcoholic steatohepatitis and for the treatment of severe hypertriglyceridemia.
89bio, Inc. was formed as a Delaware corporation in , for the purpose of completing an initial public offering and related transactions in order to carry on the business of 89Bio Ltd., which was incorporated in Israel in January 2018.
Public Offerings
In July 2020, the Company completed an underwritten public offering of
In September 2020, the Company completed an underwritten public offering of
Liquidity
The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. To date, the Company has not generated revenues from its activities and has incurred substantial operating losses. Management expects the Company to continue to generate substantial operating losses for the foreseeable future until it completes development of its products and seeks regulatory approvals to market such products. The Company had cash, cash equivalents and short-term available-for-sale securities of $
The Company expects that its cash, cash equivalents and short-term available-for-sale securities as of June 30, 2021, together with proceeds available from the Company’s term loan (see Note 6), will be sufficient to fund operating expenses and capital expenditure requirements for a period of at least one year from the date these unaudited condensed consolidated financial statements are filed with the Securities and Exchange Commission (“SEC”).
2. Summary of Significant Accounting Policies
Unaudited Condensed Consolidated Financial Statements
The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and applicable rules and regulations of the SEC regarding interim financial reporting.
The accompanying interim condensed consolidated financial statements are unaudited. The interim unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements as of and for the year ended December 31, 2020 and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s consolidated financial position, results of operations and comprehensive loss, and cash flows. The results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any other future annual or interim period. The condensed consolidated balance sheet as of December 31, 2020 was derived from the audited financial statements as of that date. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on March 25, 2021.
5
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of expenses during the reporting period. Significant estimates and assumptions made in the accompanying condensed consolidated financial statements include but are not limited to the fair value of stock options and certain accrued expenses. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could differ from those estimates.
Fair Value Measurements
Financial assets and liabilities are recorded at fair value on a recurring basis in the condensed consolidated balance sheets. The carrying values of Company’s financial assets and liabilities, including cash and cash equivalents, restricted cash, prepaid and other current assets, accounts payable and accrued expenses approximate to their fair value due to the short-term nature of these instruments. The fair value of the Company’s term loan approximates to its carrying value, or amortized cost, due to the short-term nature of this obligation and the market rates of interest rates it bears. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. Assets and liabilities recorded at fair value are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels are directly related to the amount of subjectivity with the inputs to the valuation of these assets or liabilities as follows:
Level 1—Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;
Level 2—Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable inputs for similar assets or liabilities. These include quoted prices for identical or similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active;
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Risks and Uncertainties
The ongoing COVID-19 pandemic has disrupted and may continue to disrupt the Company’s business and delay its preclinical and clinical programs and timelines. The Company does not yet know the full extent of potential delays to clinical trials, which could prevent or delay the Company from obtaining approval for BIO89-100. The extent to which the COVID-19 pandemic may impact the Company’s future operating results and financial condition is uncertain.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. Cash equivalents consist primarily of amounts invested in money market funds and commercial paper that are stated at fair value.
Investments
Investments have been classified as available-for-sale and are carried at estimated fair value as determined based upon quoted market prices or pricing models for similar securities. Management determines the appropriate classification of its available-for-sale investments in debt securities at the time of purchase. Generally, investments with original maturities beyond three months at the date of purchase are classified as short-term because it is management’s intent to use the investments to fund current operations or to make them available for current operations.
Unrealized gains and losses are excluded from earnings and are reported as a component of comprehensive loss. The Company periodically evaluates whether declines in fair values of its available-for-sale securities below their book value are other-than-temporary. This evaluation consists of several qualitative and quantitative factors regarding the severity and duration of the unrealized loss as well as the Company’s ability and intent to hold the available-for-sale security until a forecasted recovery occurs. Additionally, the Company assesses whether it has plans to sell the security or it is more likely than not it will be required to sell any available-for-sale securities before recovery of its amortized cost basis. Realized gains and losses and declines in fair value judged to be other than
6
temporary, if any, on available-for-sale securities are included in other (expenses) income, net. The cost of investments sold is based on the specific-identification method. There are
Comprehensive Loss
The Company’s comprehensive loss is comprised of net loss and changes in unrealized gains or losses on available-for-sale securities and foreign currency translation adjustments.
Recent Accounting Pronouncements
In February 2016, the Financial Standards Accounting Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-02—Leases (“ASU 2016-02”), requiring the recognition of lease assets and liabilities on the balance sheet. The standard: (a) clarifies the definition of a lease; (b) requires a dual approach to lease classification similar to current lease classifications; and (c) causes lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset for leases with a lease-term of more than twelve months. The standard is effective for public entities for fiscal years beginning after December 15, 2018 and for nonpublic entities for fiscal years beginning after December 15, 2021. As an emerging growth company, ASU 2016-02 is effective for the Company for the year ending December 31, 2022 and interim periods within the year ending December 31, 2023. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which replaces the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measured at amortized cost to be presented at the net amount expected to be collected. The standard is effective for public entities for fiscal years beginning after December 15, 2019 and for nonpublic entities for fiscal years beginning after December 15, 2022. As an emerging growth company, ASU 2016-13 is effective for the Company for the year ending December 31, 2023 and interim periods within that fiscal year and must be adopted using a modified retrospective approach, with certain exceptions. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.
3. Fair Value Measurements
The following table presents the Company’s financial assets measured at fair value on a recurring basis by level within the fair value hierarchy as of June 30, 2021 (in thousands):
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June 30, 2021 |
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Valuation |
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Amortized |
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Unrealized |
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Unrealized |
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Hierarchy |
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Cost |
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Gains |
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Losses |
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Fair Value |
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Money market funds |
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Level 1 |
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$ |
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|
|
$ |
— |
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|
$ |
— |
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|
$ |
|
|
|
Commercial paper |
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Level 2 |
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|
|
|
|
|
|
|
|
|
( |
) |
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|
|
|
|
Agency bonds |
|
Level 2 |
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|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
Corporate debt securities |
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Level 2 |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
U.S. government bonds |
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Level 2 |
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|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
Municipal bonds |
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Level 2 |
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|
|
|
|
|
|
|
|
|
— |
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|
|
|
|
|
Non-U.S. debt securities |
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Level 2 |
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|
|
|
|
|
— |
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|
|
— |
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|
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Total cash equivalents and available-for-sale securities |
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$ |
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|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
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|
|
Classified as: |
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Cash equivalents |
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|
|
|
|
|
|
|
|
|
|
|
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$ |
|
|
|
Short-term available-for-sale securities |
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|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Total cash equivalents and available-for-sale securities |
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|
|
|
|
|
|
|
|
|
|
|
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$ |
|
|
The following table summarizes the Company’s available-for-sale securities by contractual maturity as of June 30, 2021 (in thousands):
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June 30, 2021 |
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Within one year |
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$ |
|
|
|
After one year through two years |
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|
|
|
|
Total cash equivalents and available-for-sale securities |
|
$ |
|
|
7
The following table presents the Company’s financial assets measured at fair value on a recurring basis by level within the fair value hierarchy as of December 31, 2020 (in thousands):
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December 31, 2020 |
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Valuation |
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Amortized |
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