Vincerx Pharma(VINC) - 2023 Q3 - Quarterly Report

Part I - Financial Information Financial Statements The company reported significant net losses and a substantial decrease in total assets, raising substantial doubt about its ability to continue as a going concern Condensed Consolidated Balance Sheets Total assets significantly decreased to $26.3 million from $59.3 million, primarily due to reduced cash and marketable securities, leading to a sharp decline in stockholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2023 (Unaudited) | Dec 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $15,078 | $11,663 | | Short-term marketable securities | $5,724 | $40,796 | | Total current assets | $22,818 | $55,964 | | Total assets | $26,276 | $59,286 | | Liabilities & Equity | | | | Total current liabilities | $8,846 | $9,156 | | Total liabilities | $10,535 | $11,618 | | Total stockholders' equity | $15,741 | $47,668 | Condensed Consolidated Statements of Operations and Comprehensive Loss The company reported a net loss of $9.7 million for Q3 2023 and $35.2 million for the nine months, primarily driven by reduced operating expenses Statement of Operations Highlights (in thousands, except per share amounts) | Metric | Q3 2023 | Q3 2022 | YTD 2023 | YTD 2022 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $6,800 | $11,066 | $25,260 | $40,779 | | General and administrative | $3,517 | $4,525 | $11,816 | $14,903 | | Total operating expenses | $10,317 | $16,901 | $37,076 | $58,151 | | Net loss | ($9,715) | ($16,879) | ($35,207) | ($51,724) | | Net loss per share | ($0.46) | ($0.80) | ($1.66) | ($2.46) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities decreased to $32.4 million, while investing activities provided $35.8 million, resulting in a $3.4 million increase in cash and equivalents Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(32,434) | $(45,787) | | Net cash provided by (used in) investing activities | $35,750 | $(20,195) | | Net cash provided by financing activities | $96 | $242 | | Net increase (decrease) in cash | $3,415 | $(65,696) | Notes to Condensed Consolidated Financial Statements Notes highlight the company's dependence on Bayer-licensed cancer therapies, significant accounting policies, and substantial doubt about its ability to continue as a going concern due to future capital needs and potential $1.0 billion milestone payments - The company concluded there is substantial doubt about its ability to continue as a going concern for one year, requiring additional capital before the financial statement issuance anniversary[40] - Under the Bayer License Agreement, the company may incur aggregate milestone payments exceeding $1.0 billion upon successful commercialization of at least five licensed products, in addition to royalties[54] - As of September 30, 2023, the company held approximately $20.8 million in cash, cash equivalents, and marketable securities, projected to fund operations into late 2024[38] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the company's Bayer-licensed pipeline, highlighting decreased operating expenses, sufficient cash to fund operations into late 2024, and substantial doubt about its going concern ability without additional capital Results of Operations Operating expenses significantly decreased for both the three and nine months ended September 30, 2023, primarily due to reductions in research and development and general and administrative costs Change in Operating Expenses (in thousands) | Expense Category | YTD 2023 | YTD 2022 | Change | | :--- | :--- | :--- | :--- | | Research and development | $25,260 | $40,779 | $(15,519) | | General and administrative | $11,816 | $14,903 | $(3,087) | | Total operating expenses | $37,076 | $58,151 | $(21,075) | - The $15.5 million decrease in R&D expenses for the nine months ended September 30, 2023, was primarily driven by reduced manufacturing services, stock-based compensation, clinical services, and payroll costs[95] Liquidity and Capital Resources The company's $20.8 million in cash is expected to fund operations into late 2024, but recurring losses and future capital needs create substantial doubt about its ability to continue as a going concern - The company's existing cash of approximately $20.8 million is expected to fund operations and capital requirements into late 2024[104] - Management concluded there is substantial doubt about the company's ability to continue as a going concern for one year from the financial statement issuance due to the need for additional capital[109] - Future obligations include significant milestone payments to Bayer, potentially exceeding $1.0 billion in aggregate if at least five licensed products are successfully commercialized[103] Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from interest rate and foreign currency fluctuations, but due to short-term investments and USD-denominated operations, a 10% change would not materially impact financial statements - The company does not anticipate material risks from interest rate changes due to the short-term nature of its investments[121] - Future operating results are not expected to be significantly affected by foreign currency transaction risk as operations are principally denominated in U.S. dollars[122] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal control over financial reporting during the third quarter - The CEO and CFO concluded that as of September 30, 2023, the company's disclosure controls and procedures were effective at the reasonable assurance level[125] - There were no material changes in internal control over financial reporting during the three months ended September 30, 2023[126] Part II - Other Information Legal Proceedings The company is not currently a party to any material legal proceedings and is unaware of any pending or threatened actions that could adversely affect its operations - As of the report date, the company is not involved in any material legal proceedings[128] Risk Factors The company faces extensive risks, including substantial dependence on the Bayer License Agreement, recurring net losses, significant capital needs, going concern doubts, early-stage product development, regulatory hurdles, competition, intellectual property issues, and potential Nasdaq delisting - The company's entire product pipeline is licensed from Bayer, creating high dependence on the Bayer License Agreement, with potential termination if obligations are not met[129][130] - The company has incurred net losses since inception and faces substantial doubt about its ability to continue as a going concern without raising additional capital[176][182] - On September 14, 2023, the company received a Nasdaq notice for failing to meet the $1.00 minimum bid price requirement, potentially leading to delisting[285] Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents and certifications from the CEO and CFO as required by the Sarbanes-Oxley Act - Exhibits filed include corporate governance documents and certifications by the Principal Executive Officer and Principal Financial Officer pursuant to the Sarbanes-Oxley Act of 2002[304]