Financial Performance - The company recorded a net income of $4.2 million for the year ended December 31, 2023, primarily due to a gain of $47.6 million from the sale of an in-progress research and development asset [102][103]. - The company incurred net losses of $20.5 million and $51.1 million for the three and nine months ended September 30, 2024, respectively, compared to net losses of $10.9 million and $30.7 million for the same periods in 2023 [103]. - The net loss for the three months ended September 30, 2024, was $20.5 million, compared to a net loss of $10.9 million in 2023, indicating a worsening financial position [130]. - The company reported net losses of $20.5 million and $51.1 million for the three and nine months ended September 30, 2024, respectively, compared to net losses of $10.9 million and $30.7 million for the same periods in 2023 [144]. - The company expects to continue incurring net losses for the foreseeable future, with an accumulated deficit of $97.7 million as of September 30, 2024 [144]. Revenue Generation - The company has not generated any revenue from product sales and relies solely on research services for revenue generation [116]. - Revenue for the three months ended September 30, 2024, was $176,000, a significant increase of 433% compared to $33,000 for the same period in 2023 [130]. - For the nine months ended September 30, 2024, total revenue was $863,000, an increase of 2515% from $33,000 in the same period of 2023 [137]. - Service revenue from research activities for Vertex was $0.2 million for the three months ended September 30, 2024, compared to negligible revenue in the same period of 2023 [131]. Expenses - Research and development expenses for the three months ended September 30, 2024, were $17.8 million, up 92% from $9.3 million in 2023, primarily due to increased external research costs and higher direct costs [132]. - Total operating expenses for the nine months ended September 30, 2024, were $56.9 million, up 77% from $32.3 million in 2023, largely due to increased research and development costs [137]. - Research and development expenses increased to $46.0 million for the nine months ended September 30, 2024, up from $25.7 million in the same period of 2023, representing a change of $20.4 million [139]. - General and administrative expenses increased to $4.9 million for the three months ended September 30, 2024, from $2.8 million in 2023, reflecting higher consulting and employee-related costs [134]. - General and administrative expenses rose to $10.9 million for the nine months ended September 30, 2024, compared to $6.6 million in 2023, an increase of $4.3 million [140]. Cash and Funding - The company has cash, cash equivalents, and marketable securities of $137.5 million, which, along with IPO proceeds, is expected to fund operations into the second half of 2027 [109]. - Net cash used in operating activities was $46.5 million for the nine months ended September 30, 2024, compared to $29.9 million in 2023 [148]. - The company completed its IPO in October 2024, raising approximately $302.6 million in net proceeds after deducting offering costs [107]. - Future funding requirements will depend on various factors, including the progress of clinical trials and potential collaborations [154]. Research and Development - The company expects to incur significant expenses related to research and development, including costs for clinical trials and external research services [104][119]. - The company utilizes contract research organizations for preclinical and clinical trials and plans to continue this approach until internal manufacturing capabilities are justified [110]. - The increase in research and development expenses was attributed to $3.4 million in external research costs and $3.0 million in higher direct costs for preclinical programs [132]. - The company aims to expand its pipeline of product candidates across multiple therapeutic areas, including endocrinology, immunology, and metabolic diseases [97]. Accounting and Compliance - The company qualifies as an "emerging growth company" under the JOBS Act, allowing it to delay the adoption of new accounting standards until they apply to private companies [167]. - The company may remain an emerging growth company until it exceeds $1.235 billion in annual gross revenue or meets other specified criteria [167]. - The market value of the company's stock held by non-affiliates must be less than $250 million or annual revenue must be less than $100 million to qualify as a "smaller reporting company" [167]. - There were no material changes to the company's critical accounting policies and estimates during the nine months ended September 30, 2024 [165]. - The company is not required to provide quantitative and qualitative disclosures about market risk as it is classified as a smaller reporting company [168]. - Recent accounting pronouncements that may impact the company's financial position are disclosed in the quarterly report [166]. - The financial statements may not be comparable to those of companies that comply with new accounting pronouncements as of public company effective dates [167]. - The company has elected to use the extended transition period under the JOBS Act until it no longer qualifies as an emerging growth company [167]. - The preparation of financial statements requires estimates and assumptions that affect reported amounts of assets and liabilities [164]. - Actual results may differ from estimates, which could be material to the company's financial condition [164].
Septerna, Inc.(SEPN) - 2024 Q3 - Quarterly Report