89bio(ETNB) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) The unaudited financial statements for Q1 2025 show total assets increased to $685.0 million due to a public offering, while net loss rose to $71.3 million from increased R&D expenses Condensed Consolidated Balance Sheets Total assets increased to $685.0 million by March 31, 2025, primarily due to a rise in cash and cash equivalents, significantly boosting stockholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $315,396 | $126,060 | | Marketable securities | $323,384 | $313,895 | | Total current assets | $682,944 | $476,450 | | Total assets | $685,031 | $478,685 | | Liabilities & Equity | | | | Total current liabilities | $37,884 | $36,129 | | Total liabilities | $79,573 | $77,896 | | Total stockholders' equity | $605,458 | $400,789 | | Total liabilities and stockholders' equity | $685,031 | $478,685 | Condensed Consolidated Statements of Operations and Comprehensive Loss Net loss for Q1 2025 increased to $71.3 million due to higher R&D expenses, though net loss per share decreased to $0.49 due to more shares outstanding Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | P&L Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Research and development | $64,394 | $47,428 | | General and administrative | $11,515 | $9,849 | | Total operating expenses | $75,909 | $57,277 | | Loss from operations | $(75,909) | $(57,277) | | Net loss | $(71,275) | $(51,681) | | Net loss per share, basic and diluted | $(0.49) | $(0.54) | | Weighted-average shares outstanding | 146,365,115 | 95,846,740 | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity significantly increased to $605.5 million by March 31, 2025, primarily driven by $269.9 million from a public offering, partially offset by net loss - In Q1 2025, the company issued common stock and pre-funded warrants in a public offering, raising net proceeds of $269.9 million[16] - The increase in equity was offset by a net loss of $71.3 million and other comprehensive loss of $0.2 million for the quarter[16] Condensed Consolidated Statements of Cash Flows Net cash used in operations increased to $71.7 million in Q1 2025, but a $268.9 million inflow from financing activities led to a net increase in cash to $315.4 million Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(71,737) | $(39,720) | | Net cash used in investing activities | $(7,833) | $(79,898) | | Net cash provided by financing activities | $268,906 | $21,030 | | Net change in cash and cash equivalents | $189,336 | $(98,588) | | Cash and cash equivalents at end of period | $315,396 | $217,573 | Notes to Unaudited Condensed Consolidated Financial Statements The notes confirm the company's clinical-stage focus on pegozafermin, an accumulated deficit of $895.8 million, and sufficient cash of $638.8 million for at least one year, alongside key financial commitments - The company is a clinical-stage biopharmaceutical company developing pegozafermin for MASH and SHTG[21] - As of March 31, 2025, the company had an accumulated deficit of $895.8 million but believes its cash, cash equivalents, and marketable securities of $638.8 million are sufficient to fund operations for at least one year[23][24] - In February 2025, the company raised net proceeds of approximately $269.9 million from an underwritten public offering[62] - The company has a term loan facility for up to $150.0 million, with $35.0 million drawn as of March 31, 2025; access to the $30.0 million Tranche 2 is not anticipated[56] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the advancement of pegozafermin in Phase 3 trials, a $17.0 million increase in R&D expenses, and $638.8 million in cash, which is deemed sufficient for at least one year of operations Overview The company is a clinical-stage biopharmaceutical firm developing pegozafermin, with Phase 3 trials for MASH and SHTG progressing and commercial supply preparations underway - Lead product candidate, pegozafermin, is in Phase 3 development for MASH and SHTG[76] - The Phase 3 ENLIGHTEN program for MASH is enrolling patients, with topline data for the F2-F3 cohort expected in H1 2027 and the F4 cohort in 2028[78][80] - The Phase 3 ENTRUST trial for SHTG has completed enrollment, with topline data expected in Q1 2026[79][81] - A collaboration with BiBo is in place to construct a production facility for pegozafermin's commercial supply[82] Results of Operations Q1 2025 R&D expenses increased by $17.0 million to $64.4 million, driven by Phase 3 MASH trials, while G&A expenses also rose Change in Operating Expenses (in thousands) | Expense Category | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Research and development | $64,394 | $47,428 | $16,966 | | Clinical development | $33,795 | $17,924 | $15,871 | | Contract manufacturing | $19,057 | $21,351 | $(2,294) | | Personnel-related expenses | $10,673 | $7,733 | $2,940 | | General and administrative | $11,515 | $9,849 | $1,666 | Liquidity and Capital Resources As of March 31, 2025, the company held $638.8 million in cash and equivalents, bolstered by a $269.9 million public offering, sufficient to fund operations for at least one year - The company had cash, cash equivalents, and marketable securities of $638.8 million as of March 31, 2025[96] - In February 2025, a public offering raised net proceeds of $269.9 million[100] - Existing cash is expected to fund operations for at least one year from the filing date of the 10-Q[105] - The company does not anticipate meeting the condition to access Tranche 2 ($30.0 million) of its Term Loan Facility[106] Contractual Obligations and Commitments The company has significant future financial commitments, including $35.0 million in outstanding debt, potential $65.0 million milestone payments to Teva, and a $13.5 million payment to BiBo for a production facility - Obligated to pay Teva up to $65.0 million upon achievement of specified commercial milestones for pegozafermin[118] - A remaining $13.5 million is payable to BiBo for a production facility upon achieving a certain milestone[119] - The outstanding principal of $35.0 million under the Loan Agreement matures on October 1, 2028[117] Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no material changes in its market risk from the information provided in its Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes in market risk since the last Annual Report on Form 10-K[122] Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2025 - Management concluded that disclosure controls and procedures were effective as of March 31, 2025[124] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[125] PART II. OTHER INFORMATION Legal Proceedings The company reports that it is not currently a party to any material legal proceedings - The company is not currently a party to any material legal proceedings[128] Risk Factors The company faces significant risks including dependence on pegozafermin's success, clinical and regulatory uncertainties, capital needs, reliance on third-party manufacturers, competition, and intellectual property disputes Risks Related to Business and Industry Risks include the company's dependence on pegozafermin, the uncertain and costly nature of clinical trials, the need for additional capital, reliance on third-party manufacturers, and intense competition - The company is a clinical-stage biopharmaceutical company with a history of net losses and its business depends entirely on the success of pegozafermin[131][136] - The company will require substantial additional capital to finance operations, which may not be available on acceptable terms[140] - Reliance on third-party manufacturers, including BiBo in China, exposes the company to supply chain, geopolitical, and regulatory risks like the proposed BIOSECURE Act[147][148][154] - The company faces substantial competition from other companies developing therapies for MASH and SHTG, some with greater resources[163] Risks Related to Regulatory Approvals Significant regulatory risks include the uncertainty of pegozafermin's approval, potential post-market issues, and the limitations of expedited designations, compounded by FDA disruptions and evolving requirements - Pegozafermin has not received regulatory approval, and the process is lengthy, expensive, and uncertain[189][193] - Even if approved, pegozafermin could face post-market difficulties, including potential revocation of approval if harmful side effects are discovered[192] - Breakthrough Therapy and PRIME designations do not guarantee a faster review or ultimate approval[195][196] - Disruptions at the FDA and other government agencies, including policy changes and budget constraints, could negatively affect the review of regulatory submissions[199] Risks Related to Intellectual Property Intellectual property risks include the uncertainty of patent protection, reliance on a critical license from Teva, and the potential for costly litigation to defend or enforce IP rights - Success depends on the ability to obtain and maintain intellectual property protection for products and technologies, which is highly uncertain[209][213] - The company relies on a license from Teva for the glycoPEGylation technology essential for pegozafermin; termination of this license would materially harm the business[217] - The company may become involved in expensive and unsuccessful lawsuits to protect its intellectual property or defend against infringement claims from third parties[220][223] Risks Related to Ownership of Our Common Stock Risks to common stock ownership include significant price volatility, potential depression from substantial share sales, and dilution from future equity offerings - The price of the company's common stock may be volatile and fluctuate significantly due to clinical developments, competitor news, and market trends[225] - Sales of a substantial number of shares, or the perception of such sales, could depress the stock price[226] - Raising additional capital through equity offerings may cause significant dilution to existing stockholders[229] General Risk Factors General risks include substantial control by insiders, inherent limitations of internal controls, and exclusive forum provisions that may limit stockholders' judicial options - Directors, executive officers, and holders of 5% or more of the stock have substantial control over the company[232] - The company's disclosure and internal controls have inherent limitations and may not prevent all errors or fraud; failure to maintain effective controls could harm investor confidence[233][235] - The company's ability to use its net operating loss (NOL) carryforwards may be limited, and a potential tax assessment from Israeli authorities could impact NOLs and financial condition[239][240] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[242] Other Information The company states that none of its directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the first quarter of 2025 - No directors or executive officers adopted or terminated a Rule 10b5-1 trading plan during the three months ended March 31, 2025[245] Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including corporate governance documents, forms of warrants, and officer certifications - The report includes a list of all exhibits filed, such as the Certificate of Incorporation, Bylaws, forms of warrants, and officer certifications required by the SEC[247]