etnb-10q_20220331.htm
false Q1 0001785173 --12-31 P1Y 2019-06-30 P3Y P1Y P3Y P8Y1M6D P8Y2M12D P7Y3M18D P6Y1M6D 0.906 0.975 0.016 0.007 P6Y P6Y1M6D 0.910 0.976 0.019 0.008 0001785173 2022-01-01 2022-03-31 xbrli:shares 0001785173 2022-05-02 iso4217:USD 0001785173 2022-03-31 0001785173 2021-12-31 0001785173 2021-01-01 2021-03-31 iso4217:USD xbrli:shares 0001785173 us-gaap:CommonStockMember 2021-12-31 0001785173 us-gaap:AdditionalPaidInCapitalMember 2021-12-31 0001785173 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-12-31 0001785173 us-gaap:RetainedEarningsMember 2021-12-31 0001785173 us-gaap:CommonStockMember 2022-01-01 2022-03-31 0001785173 us-gaap:AdditionalPaidInCapitalMember 2022-01-01 2022-03-31 0001785173 us-gaap:RetainedEarningsMember 2022-01-01 2022-03-31 0001785173 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-01-01 2022-03-31 0001785173 us-gaap:CommonStockMember 2022-03-31 0001785173 us-gaap:AdditionalPaidInCapitalMember 2022-03-31 0001785173 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-03-31 0001785173 us-gaap:RetainedEarningsMember 2022-03-31 0001785173 us-gaap:CommonStockMember 2020-12-31 0001785173 us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001785173 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-12-31 0001785173 us-gaap:RetainedEarningsMember 2020-12-31 0001785173 2020-12-31 0001785173 us-gaap:CommonStockMember 2021-01-01 2021-03-31 0001785173 us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-03-31 0001785173 us-gaap:RetainedEarningsMember 2021-01-01 2021-03-31 0001785173 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-01-01 2021-03-31 0001785173 us-gaap:CommonStockMember 2021-03-31 0001785173 us-gaap:AdditionalPaidInCapitalMember 2021-03-31 0001785173 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-03-31 0001785173 us-gaap:RetainedEarningsMember 2021-03-31 0001785173 2021-03-31 0001785173 srt:MaximumMember etnb:ATMFacilityMember 2021-03-01 2021-03-31 0001785173 etnb:ATMFacilityMember 2022-01-01 2022-03-31 xbrli:pure 0001785173 etnb:SVBLeerinkLLCAndCantorFitzgeraldCoMember 2021-03-31 0001785173 etnb:SVBLeerinkLLCAndCantorFitzgeraldCoMember 2021-10-01 2021-11-30 0001785173 etnb:SVBLeerinkLLCAndCantorFitzgeraldCoMember 2021-11-30 0001785173 srt:MinimumMember 2022-03-31 0001785173 srt:MaximumMember 2022-03-31 0001785173 us-gaap:FairValueInputsLevel1Member us-gaap:MoneyMarketFundsMember us-gaap:FairValueMeasurementsRecurringMember 2022-03-31 0001785173 us-gaap:FairValueInputsLevel2Member us-gaap:CommercialPaperMember us-gaap:FairValueMeasurementsRecurringMember 2022-03-31 0001785173 us-gaap:FairValueInputsLevel2Member us-gaap:USGovernmentAgenciesShorttermDebtSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2022-03-31 0001785173 us-gaap:FairValueInputsLevel2Member us-gaap:CorporateDebtSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2022-03-31 0001785173 us-gaap:FairValueInputsLevel2Member us-gaap:AgencySecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2022-03-31 0001785173 us-gaap:FairValueInputsLevel2Member us-gaap:MunicipalBondsMember us-gaap:FairValueMeasurementsRecurringMember 2022-03-31 0001785173 us-gaap:FairValueInputsLevel2Member us-gaap:ForeignGovernmentDebtSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2022-03-31 0001785173 us-gaap:FairValueMeasurementsRecurringMember 2022-03-31 0001785173 us-gaap:CashEquivalentsMember us-gaap:FairValueMeasurementsRecurringMember 2022-03-31 0001785173 us-gaap:ShortTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2022-03-31 0001785173 us-gaap:FairValueInputsLevel1Member us-gaap:MoneyMarketFundsMember us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001785173 us-gaap:FairValueInputsLevel2Member us-gaap:CommercialPaperMember us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001785173 us-gaap:FairValueInputsLevel2Member us-gaap:USGovernmentAgenciesShorttermDebtSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001785173 us-gaap:FairValueInputsLevel2Member us-gaap:CorporateDebtSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001785173 us-gaap:FairValueInputsLevel2Member us-gaap:AgencySecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001785173 us-gaap:FairValueInputsLevel2Member us-gaap:MunicipalBondsMember us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001785173 us-gaap:FairValueInputsLevel2Member us-gaap:ForeignGovernmentDebtSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001785173 us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001785173 us-gaap:CashEquivalentsMember us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001785173 us-gaap:ShortTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001785173 etnb:SanFranciscoOfficeMember 2022-03-31 0001785173 etnb:SanFranciscoOfficeMember 2022-01-01 2022-03-31 0001785173 etnb:TevaAgreementMember etnb:TevasGlycoPEGylatedFGF21ProgramMember 2018-04-01 2018-04-30 0001785173 etnb:TevaAgreementMember etnb:TevasDevelopmentProgramMember 2018-04-01 2018-04-30 0001785173 etnb:TevaAgreementMember 2018-04-01 2018-04-30 0001785173 etnb:TevaAgreementMember 2022-01-01 2022-03-31 0001785173 etnb:TevaAgreementMember us-gaap:ResearchAndDevelopmentExpenseMember 2022-01-01 2022-03-31 0001785173 etnb:TevaAgreementMember us-gaap:ResearchAndDevelopmentExpenseMember 2021-01-01 2021-03-31 0001785173 etnb:TermALoanFacilityMember etnb:LoanAndSecurityAgreementMember 2020-04-30 0001785173 etnb:TermBLoanFacilityMember etnb:LoanAndSecurityAgreementMember 2020-04-30 0001785173 etnb:LoanAndSecurityAgreementMember 2020-04-01 2020-04-30 0001785173 etnb:LoanAndSecurityAgreementMember 2020-04-30 0001785173 etnb:LoanAndSecurityAgreementMember us-gaap:OtherAssetsMember 2020-04-30 0001785173 etnb:LoanAndSecurityAgreementMember etnb:TermALoanFacilityMember 2021-05-31 0001785173 etnb:LoanAndSecurityAgreementMember etnb:TermBLoanFacilityMember 2021-05-01 2021-05-31 0001785173 etnb:LoanAndSecurityAgreementMember 2021-05-01 2021-05-31 0001785173 etnb:LoanAndSecurityAgreementMember etnb:TermALoanFacilityMember 2022-01-01 2022-03-31 0001785173 etnb:LoanAndSecurityAgreementMember 2022-01-01 2022-03-31 0001785173 etnb:LoanAndSecurityAgreementMember srt:MinimumMember 2022-01-01 2022-03-31 0001785173 etnb:LoanAndSecurityAgreementMember us-gaap:PrimeRateMember 2022-01-01 2022-03-31 0001785173 etnb:LoanAndSecurityAgreementMember srt:MaximumMember 2022-01-01 2022-03-31 0001785173 etnb:LoanAndSecurityAgreementMember 2021-05-31 0001785173 etnb:LoanAndSecurityAgreementMember us-gaap:ValuationTechniqueOptionPricingModelMember us-gaap:MeasurementInputRiskFreeInterestRateMember 2021-05-31 0001785173 etnb:LoanAndSecurityAgreementMember us-gaap:MeasurementInputExpectedDividendPaymentMember 2021-05-01 2021-05-31 0001785173 etnb:LoanAndSecurityAgreementMember us-gaap:ValuationTechniqueOptionPricingModelMember us-gaap:MeasurementInputPriceVolatilityMember 2021-05-31 0001785173 etnb:LoanAndSecurityAgreementMember us-gaap:ValuationTechniqueOptionPricingModelMember us-gaap:MeasurementInputExpectedTermMember 2021-05-01 2021-05-31 0001785173 etnb:LoanAndSecurityAgreementMember etnb:TermBLoanFacilityMember 2021-05-31 0001785173 etnb:TwoThousandAndNineteenEquityIncentivePlanMember 2019-09-01 2019-09-30 0001785173 srt:MaximumMember etnb:TwoThousandAndNineteenEquityIncentivePlanMember 2019-09-01 2019-09-30 0001785173 etnb:TwoThousandAndNineteenEquityIncentivePlanMember 2022-03-31 0001785173 us-gaap:EmployeeStockMember 2019-10-01 2019-10-31 0001785173 us-gaap:EmployeeStockMember srt:MaximumMember 2019-10-01 2019-10-31 0001785173 us-gaap:EmployeeStockMember 2022-03-31 0001785173 etnb:TwoThousandAndNineteenEquityIncentivePlanMember 2021-12-31 0001785173 etnb:TwoThousandAndNineteenEquityIncentivePlanMember 2022-01-01 2022-03-31 0001785173 etnb:TwoThousandAndNineteenEquityIncentivePlanMember 2021-01-01 2021-12-31 0001785173 srt:MinimumMember 2022-01-01 2022-03-31 0001785173 srt:MaximumMember 2022-01-01 2022-03-31 0001785173 etnb:ServiceBasedRSUsMember us-gaap:ShareBasedPaymentArrangementEmployeeMember 2022-01-01 2022-03-31 0001785173 etnb:ServiceBasedRSUsMember us-gaap:ShareBasedPaymentArrangementEmployeeMember 2021-01-01 2021-03-31 0001785173 etnb:ServiceBasedRSUsMember us-gaap:ShareBasedPaymentArrangementEmployeeMember 2022-02-01 2022-02-28 0001785173 etnb:ServiceBasedRSUsMember us-gaap:ShareBasedPaymentArrangementEmployeeMember 2021-02-01 2021-02-28 0001785173 etnb:PerformanceRSUsMember etnb:ExecutiveOfficerAndCertainEmployeesMember 2022-01-01 2022-03-31 0001785173 etnb:PerformanceRSUsMember etnb:ExecutiveOfficerAndCertainEmployeesMember 2021-01-01 2021-03-31 0001785173 etnb:PerformanceRSUsMember etnb:ExecutiveOfficerAndCertainEmployeesMember 2021-02-01 2021-02-28 0001785173 us-gaap:RestrictedStockUnitsRSUMember 2021-12-31 0001785173 us-gaap:RestrictedStockUnitsRSUMember 2022-01-01 2022-03-31 0001785173 us-gaap:RestrictedStockUnitsRSUMember 2022-03-31 0001785173 us-gaap:ResearchAndDevelopmentExpenseMember 2022-01-01 2022-03-31 0001785173 us-gaap:ResearchAndDevelopmentExpenseMember 2021-01-01 2021-03-31 0001785173 us-gaap:GeneralAndAdministrativeExpenseMember 2022-01-01 2022-03-31 0001785173 us-gaap:GeneralAndAdministrativeExpenseMember 2021-01-01 2021-03-31 0001785173 us-gaap:EmployeeStockOptionMember 2022-01-01 2022-03-31 0001785173 us-gaap:EmployeeStockOptionMember 2021-01-01 2021-03-31 0001785173 etnb:UnvestedRestrictedStockUnitsMember 2022-01-01 2022-03-31 0001785173 etnb:UnvestedRestrictedStockUnitsMember 2021-01-01 2021-03-31 0001785173 us-gaap:WarrantMember 2022-01-01 2022-03-31 0001785173 us-gaap:EmployeeStockMember 2022-01-01 2022-03-31 0001785173 us-gaap:EmployeeStockMember 2021-01-01 2021-03-31

 

 

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 March 31, 2022

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: 001-39122

 

89bio, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

36-4946844

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

142 Sansome Street, Second Floor

San Francisco, California 94104

94104

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (415) 432-9270

 

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 $0.001 per share

 

ETNB

 

Nasdaq Global 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 May 2, 2022, the registrant had 20,351,384 shares of common stock, $0.001 par value per share, outstanding.

 

 

 


 

 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements (Unaudited)

1

 

Condensed Consolidated Balance Sheets

1

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

2

 

Condensed Consolidated Statements of Stockholders’ Equity

3

 

Condensed Consolidated Statements of Cash Flows

4

 

Notes to Unaudited Condensed Consolidated Financial Statements

5

Item 2.

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

13

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

18

Item 4.

Controls and Procedures

18

PART II.

OTHER INFORMATION

20

Item 1.

Legal Proceedings

20

Item 1A.

Risk Factors

20

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

36

Item 3.

Default Upon Senior Securities

36

Item 4.

Mine Safety Disclosures

36

Item 5.

Other Information

36

Item 6.

Exhibits

37

Signatures

38

 

 

i


 

 

PART I—FINANCIAL INFORMATION

 

Item 1. Financial Statements.

89bio, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

54,889

 

 

$

52,432

 

Restricted cash

 

 

25

 

 

 

25

 

Short-term available-for-sale securities

 

 

71,197

 

 

 

98,288

 

Prepaid and other current assets

 

 

9,298

 

 

 

11,237

 

Total current assets

 

 

135,409

 

 

 

161,982

 

Property and equipment, net

 

 

138

 

 

 

150

 

Other assets

 

 

218

 

 

 

290

 

Total assets

 

$

135,765

 

 

$

162,422

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

4,421

 

 

$

6,843

 

Accrued expenses

 

 

8,979

 

 

 

10,194

 

Term loan, current

 

 

5,000

 

 

 

2,500

 

Total current liabilities

 

 

18,400

 

 

 

19,537

 

Term loan, non-current, net

 

 

14,473

 

 

 

16,898

 

Other non-current liability

 

 

151

 

 

 

30

 

Total liabilities

 

 

33,024

 

 

 

36,465

 

Commitments and contingencies (Note 5)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock

 

 

20

 

 

 

20

 

Additional paid-in capital

 

 

341,759

 

 

 

339,218

 

Accumulated other comprehensive loss

 

 

(256

)

 

 

(64

)

Accumulated deficit

 

 

(238,782

)

 

 

(213,217

)

Total stockholders’ equity

 

 

102,741

 

 

 

125,957

 

Total liabilities and stockholders’ equity

 

$

135,765

 

 

$

162,422

 

 

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)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2022

 

 

2021

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

$

19,849

 

 

$

10,131

 

General and administrative

 

 

5,259

 

 

 

4,608

 

Total operating expenses

 

 

25,108

 

 

 

14,739

 

Loss from operations

 

 

(25,108

)

 

 

(14,739

)

Other expenses, net

 

 

(456

)

 

 

(43

)

Net loss before tax

 

 

(25,564

)

 

 

(14,782

)

Income tax expense

 

 

(1

)

 

 

 

Net loss

 

$

(25,565

)

 

$

(14,782

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

Unrealized loss on available-for-sale securities

 

 

(195

)

 

 

(4

)

Foreign currency translation adjustments

 

 

3

 

 

 

11

 

Total other comprehensive income (loss)

 

$

(192

)

 

$

7

 

Comprehensive loss

 

$

(25,757

)

 

$

(14,775

)

Net loss per share, basic and diluted

 

$

(1.26

)

 

$

(0.74

)

Weighted-average shares used to compute net loss per share, basic

   and diluted

 

 

20,339,416

 

 

 

20,010,412

 

 

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 Months Ended March 31, 2022 and 2021

(Unaudited)

(In thousands, except share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance as of December 31, 2021

 

 

20,317,204

 

 

$

20

 

 

$

339,218

 

 

$

(64

)

 

$

(213,217

)

 

$

125,957

 

Issuance of common stock upon exercise of stock options

 

 

12,065

 

 

 

 

 

 

29

 

 

 

 

 

 

 

 

 

29

 

Issuance of common stock upon vesting of restricted stock units

 

 

22,115

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,512

 

 

 

 

 

 

 

 

 

2,512

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(25,565

)

 

 

(25,565

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(192

)

 

 

 

 

 

 

(192

)

Balance as of March 31, 2022

 

 

20,351,384

 

 

$

20

 

 

$

341,759

 

 

$

(256

)

 

$

(238,782

)

 

$

102,741

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance as of December 31, 2020

 

 

19,931,660

 

 

$

20

 

 

$

326,046

 

 

$

(10

)

 

$

(123,095

)

 

$

202,961

 

Issuance of common stock upon exercise of stock options

 

 

103,170

 

 

 

 

 

 

216

 

 

 

 

 

 

 

 

 

216

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,793

 

 

 

 

 

 

 

 

 

1,793

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,782

)

 

 

(14,782

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

 

 

 

7

 

Balance as of March 31, 2021

 

 

20,034,830

 

 

$

20

 

 

$

328,055

 

 

$

(3

)

 

$

(137,877

)

 

$

190,195

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(25,565

)

 

$

(14,782

)

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

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

2,512

 

 

 

1,793

 

Accretion of final payment fee

 

 

121

 

 

 

 

Amortization of premium on available-for-sale securities

 

 

118

 

 

 

229

 

Amortization of debt issuance costs

 

 

75

 

 

 

77

 

Depreciation

 

 

18

 

 

 

15

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid and other current assets

 

 

1,942

 

 

 

(2,726

)

Other assets

 

 

72

 

 

 

72

 

Accounts payable

 

 

(2,422

)

 

 

2,450

 

Accrued expenses

 

 

(1,215

)

 

 

(2,110

)

Net cash used in operating activities

 

 

(24,344

)

 

 

(14,982

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Proceeds from maturities of available-for-sale securities

 

 

36,179

 

 

 

29,896

 

Purchases of available-for-sale securities

 

 

(9,401

)

 

 

(45,302

)

Purchases of property and equipment

 

 

(6

)

 

 

(4

)

Net cash provided by (used in) investing activities

 

 

26,772

 

 

 

(15,410

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock upon stock option exercises

 

 

29

 

 

 

216

 

Net cash provided by financing activities

 

 

29

 

 

 

216

 

Net change in cash and cash equivalents, and restricted cash

 

 

2,457

 

 

 

(30,176

)

Cash and cash equivalents, and restricted cash at beginning of period

 

 

52,457

 

 

 

98,208

 

Cash and cash equivalents, and restricted cash at end of period

 

$

54,914

 

 

$

68,032

 

Components of cash and cash equivalents, and restricted cash:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

54,889

 

 

$

68,007

 

Restricted cash

 

 

25

 

 

 

25

 

Total cash and cash equivalents, and restricted cash

 

$

54,914

 

 

$

68,032

 

Supplemental disclosures of cash information:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

169

 

 

$

 

Cash paid for income taxes

 

$

 

 

$

154

 

Supplemental disclosures of noncash information:

 

 

 

 

 

 

 

 

Purchases of property and equipment included in accounts payable and accrued expenses

 

$

 

 

$

6

 

 

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, pegozafermin (previously 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 was formed as a Delaware corporation in June 2019 to carry on the business of 89Bio Ltd., which was incorporated in Israel in January 2018.

Sales Agreement

In March 2021, the Company entered into a sales agreement (the “Sales Agreement”) with SVB Leerink LLC and Cantor Fitzgerald & Co. (the “Sales Agents”) pursuant to which it may offer and sell up to $75.0 million of shares of the Company’s common stock, from time to time, in “at-the-market” offerings (the “ATM Facility”). The Sales Agents are entitled to compensation at a commission equal to 3.0% of the aggregate gross sales price per share sold under the Sales Agreement. In October and November 2021, the Company received aggregate proceeds of $3.3 million, net of commissions and offering expenses from sales of 186,546 shares of its common stock at a weighted-average price of $17.97 per share pursuant to the ATM Facility. For the three months ended March 31, 2022, there were no sales pursuant to the ATM Facility.

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 and cash equivalents and short-term available-for-sale securities of $126.1 million as of March 31, 2022.

The Company expects that its cash and cash equivalents and short-term available-for-sale securities as of March 31, 2022, together with proceeds available from the Company’s term loan facility (see Note 6) and ATM Facility, 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, 2021 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 months ended March 31, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any other future annual or interim period. The condensed consolidated balance sheet as of December 31, 2021 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, 2021, which was filed with the SEC on March 24, 2022.

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.

5


 

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 its carrying value, or amortized cost, due to the prevailing market rates of interest 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; and

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 pegozafermin. 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, commercial paper and municipal bonds 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 temporary, if any, on available-for-sale securities are included in other expenses, net. The cost of investments sold is based on the specific-identification method. The Company has not experienced material realized gains or losses or other-than-temporary losses in the periods presented. Interest on available-for-sale securities is included in other expenses, net and is not material for the periods presented.

6


 

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 Accounting Standards 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. 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 expects to adopt ASC 842 in the fourth quarter of 2022 using the modified retrospective method with a cumulative effect adjustment, if any, to equity at the beginning of the period of adoption. The Company anticipates electing several practical expedients that permit the Company not to reassess (i) whether a contract is or contains a lease, (ii) the classification of existing leases, and (iii) whether previously capitalized initial direct costs would qualify for capitalization. The Company also anticipates electing not to separate non-lease components from the associated lease components and to not to recognize lease assets and liabilities for leases with a term of 12 months or less. The Company expects to recognize an operating liability between $0.2 million to $0.3 million with a corresponding right-of-use asset in the same amount and expects no impact to equity at the beginning of the period of adoption.

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. 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 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 March 31, 2022 (in thousands):

 

 

 

 

March 31, 2022

 

 

 

Valuation

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

 

 

 

 

 

Hierarchy

 

Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

Money market funds

 

Level 1

 

$

32,875

 

 

$

 

 

$

 

 

$

32,875

 

Commercial paper

 

Level 2

 

 

42,363

 

 

 

 

 

 

(19

)

 

 

42,344

 

U.S. government bonds

 

Level 2

 

 

21,619

 

 

 

 

 

 

(182

)

 

 

21,437

 

Corporate debt securities

 

Level 2

 

 

1,618

 

 

 

 

 

 

(11

)

 

 

1,607

 

Agency bonds

 

Level 2

 

 

6,649

 

 

 

 

 

 

(32

)

 

 

6,617

 

Municipal bonds

 

Level 2

 

 

4,986

 

 

 

 

 

 

(8

)

 

 

4,978

 

Non-U.S. debt securities

 

Level 2

 

 

2,014

 

 

 

 

 

 

(6

)

 

 

2,008

 

Total cash equivalents and available-for-sale securities

 

 

 

$

112,124

 

 

$

 

 

$

(258

)

 

$

111,866

 

Classified as:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

40,669

 

Short-term available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

71,197

 

Total cash equivalents and available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

111,866

 

 

The following table summarizes the Company’s available-for-sale securities by contractual maturity as of March 31, 2022 (in thousands):

 

 

March 31, 2022

 

Within one year

 

$

110,152

 

After one year through two years

 

 

1,714

 

Total cash equivalents and available-for-sale securities

 

$

111,866

 

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, 2021 (in thousands):

 

 

 

 

December 31, 2021

 

 

 

Valuation

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

 

 

 

 

 

Hierarchy

 

Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

Money market funds

 

Level 1

 

$

21,477

 

 

$

 

 

$

 

 

$

21,477

 

Commercial paper

 

Level 2

 

 

59,647

 

 

 

 

 

 

(10

)

 

 

59,637

 

U.S. government bonds

 

Level 2

 

 

21,662

 

 

 

 

 

 

(42

)

 

 

21,620

 

Corporate debt securities

 

Level 2

 

 

8,776

 

 

 

1

 

 

 

(1

)

 

 

8,776

 

Agency bonds

 

Level 2

 

 

7,747

 

 

 

1

 

 

 

(7

)

 

 

7,741

 

Municipal bonds

 

Level 2

 

 

4,251

 

 

 

 

 

 

(4

)

 

 

4,247

 

Non-U.S. debt securities

 

Level 2

 

 

2,506

 

 

 

 

 

 

(1

)

 

 

2,505

 

Total cash equivalents and available-for-sale securities

 

 

 

$

126,066

 

 

$

2

 

 

$

(65

)

 

$

126,003

 

Classified as:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

27,715

 

Short-term available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

98,288

 

Total cash equivalents and available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

126,003

 

  

The following table summarizes the Company’s available-for-sale securities by contractual maturity as of December 31, 2021 (in thousands):

 

 

December 31, 2021

 

Within one year

 

$

120,726

 

After one year through two years

 

 

5,277

 

Total cash equivalents and available-for-sale securities

 

$

126,003

 

 

4. Balance Sheet Components

 

Prepaid and other current assets consist of the following as of the periods indicated (in thousands):

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Prepaid research and development

 

$

6,201

 

 

$

7,895

 

Prepaid taxes

 

 

831

 

 

 

836

 

Prepaid other

 

 

2,266

 

 

 

2,506

 

Total prepaid and other current assets

 

$

9,298

 

 

$

11,237

 

Accrued expenses consist of the following as of the periods indicated (in thousands):

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Accrued research and development expenses

 

$

6,495

 

 

$

6,195

 

Accrued employee and related expenses

 

 

1,562

 

 

 

3,168

 

Accrued professional and legal fees

 

 

613

 

 

 

495

 

Accrued other expenses

 

 

309

 

 

 

336

 

Total accrued expenses

 

$

8,979

 

 

$

10,194

 

 

 

 

8